What if your bank goes bankrupt?
Banks that go bankrupt frighten the monetary and financial markets, and consumers too. The successive increases in interest from central banks to deal with the galloping inflation generated, it is explained, by the consequences of the war in Ukraine mainly, do not fail to focus the attention of all analysts. The very recent bankruptcy of Silicon Valley Bank (SVB), which went bankrupt on March 10, created a general panic (bank run) among customers.
Alerted by the information, customers rushed to withdraw their money. In the wake, two other American banks followed, the Signature Bank and Silvergate. The announcement of the bankruptcy of these three American banks created a real wave of panic, and above all raised many questions. Apart from the aspect relating to the functioning of the international financial markets, and the impact of the bankruptcy of these three institutions on the money markets, a crucial question resurfaces each time this type of situation arises: what does the regulation provide for in the event of bank failure? Are customers protected and how? Can they, even in the event of bankruptcy, recover all of their deposits? Each country has its own regulations.
In Morocco, the banking law provides for a guarantee fund for the benefit of depositors, which compensates them in the event of bankruptcy. This deposit guarantee system is an integral part of the financial safety net mechanism aimed at maintaining the stability of the banking sector. According to the (the central Bank) Bank Al-Maghrib, “the deposit guarantee system is a system established by banking law to protect depositors in the event of losses due to the inability of a member credit institution to return deposits or other repayable funds. This protection takes the form of compensation for depositors, natural and legal persons, by making deposits and other repayable funds available to them, up to the maximum amount of compensation, set by the circulars of Bank Al-Maghrib. “. The legislation states that conventional banks and participatory (chariaa-compatible) banks are required to join the deposit guarantee scheme. Said system is governed by the provisions of the banking law as well as those of the circulars and decisions of the central bank, indicates the same source.
The deposit guarantee scheme is financed through annual contributions paid by member credit institutions, calculated on the basis of a fixed rate. “Currently, the contribution rate is 0.20%, applied to the monthly average of eligible deposits. The amounts of the contributions collected are used to compensate eligible depositors in the event of failure of a member credit institution or to provide, if necessary, financial assistance to member credit institutions which find themselves in dire straits”, underlines a banking source.
Fédoua TOUNASSI
