Basel, Switzerland (GenevaLunch) - Swiss bank account holders have had little reason in the past to ask how exactly the deposit protection system work: the last bank failing was in 1991, a small savings bank in Thun. The system is in fact straightforward.

Each depositer is covered for CHF30,000 francs but under Swiss law, even for a joint account, the account is considered to be held by one “person.” James Nason, spokesperson for the Swiss Bankers Association in Basel, says this means that if two people share a joint account, they are insured for CHF30,000. If one person has two accounts, he or she is insured for CHF30,000.

Nason is quick to say there is no reason to suspect an imminent problem, however.

“As far as we know, Swiss banks are fulfilling their obligations and have enough capital.” Nason says his phone has not stopped ringing with journalists and other people wanting to make sure they’ve understood the Swiss depositer protection system. The system is managed by the banks themselves, with a total “kitty” of CHF4 billion in guarantees. Half of that money sits on the balance sheets of the banks, CHF2 billion earmarked “deposit protection” and the other half must be found by the country’s banks if one of them goes under and the CHF2 billion is not adequate to cover the guarantees.

The self-regulatory agreement is managed by Swiss Deposit Protection, an agency separate from the bankers’ association.

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