In addition to the institutional protection that it provides, BVR Institutssicherung GmbH (BVR-ISG) ensures that depositors are compensated in line with legal requirements in the event that a member institution becomes insolvent. If a deposit is not available because a bank affiliated to BVR-ISG is unable to meet its financial obligations, the depositors concerned are compensated by BVR-ISG. The standard maximum amount covered throughout the EU in each case is €100,000 per customer per bank (please see further below in this text for special cases of higher compensation entitlements). This means that this amount is calculated based on the sum total of all deposits held by a single customer at the same bank. If, for example, a depositor holds €90,000 in a savings account and €20,000 in a current account, he or she will receive only €100,000 in compensation.
Joint accounts, professional partnerships, and similar combined entities
This method is also used if a bank operates under several brands. This means that the sum total of all deposits held under one or more of these brands of the same bank is covered for up to €100,000. A limit of €100,000 applies to each depositor in the case of joint accounts. However, deposits held in a single account that can be operated by two or more individuals in their capacity as members of a professional or legal partnership, an association, or a similar combined entity without a legal personality are aggregated for the purpose of calculating the limit of €100,000 and are treated as a deposit held by a single depositor. Compensation is paid automatically based on the bank's available information on the depositor and his or her deposits. Consequently, customers do not need to pursue their claims or provide specific proof of any entitlements. BVR-ISG will reimburse deposits of up to €100,000 within no more than 20 working days. As of June 1, 2016 this period will be reduced to seven working days.
Special cases of higher compensation entitlements
Deposits of more than €100,000 are protected in those cases specified in section 8 (2) to (4) of Germany's deposit insurance legislation (EinSiG). The total amount covered may increase to as much as €500,000 if certain precisely defined conditions are met. The deposits protected in such cases are essentially the following:
- Amounts resulting from real-estate transactions involving privately used residential property;
- Amounts that fulfil social, legally prescribed purposes and are contingent on certain major events in people's lives such as marriage, divorce, retirement, termination or loss of employment, birth, illness, need for nursing care, invalidity, disability, or death;
- Payment of insurance benefits;
- Compensation paid for any damage to health caused by acts of violence or for any damage or loss caused by unjustly suffered criminal prosecution.
In order to be covered by the higher compensation entitlements, the aforementioned deposits must not have been credited to the customer accounts at the relevant bank more than six months before the compensation event occurred. Furthermore, the customer must apply in writing to BVR Institutssicherung GmbH, stating why his or her deposits are covered by the higher compensation entitlements and providing appropriate written evidence. This means that compensation is not automatically paid for deposits of more than €100,000 which are potentially eligible for compensation.
Wording of the legislation
You can find further information here: Federal Ministry of Finance and Federal Financial Supervisory Authority.