Published On: Mon, Feb 10th, 2020

Protect Your Money

Opinion - St Maarten News

By Hilbert Haar

When Girobank accountholders in Curacao panicked and started a run on the bank, the Central Bank was quick to point out that all deposits up to 10,000 guilders (just over $5,500) were safe and that this meant that more than 90 percent of all accountholders had nothing to fear. The other ten percent was obviously in a bit of a bind.

This little safety net was based on international deposit guarantee standards according to the Central Bank. But the chaos at the Girobank seemingly has inspired the Central Bank to draft a national ordinance aimed at protecting accountholders’ money. Up to which amount? That is still up in the air. It depends, the Central Bank said in a press statement, on “international standards.”

So how does this work elsewhere in the kingdom like, the Netherlands?

If a licensed bank goes bankrupt, the Dutch National Bank (DNB) guarantees deposits to a maximum of €100,000; at the current exchange rate of 1.095 that is $109,500 – a stunning difference with the 10,000 guilders (just over $5,500) guarantee the Central Bank in Curacao offered to accountholders at the Girobank in December.

Accountholders with a temporarily high balance – for instance before the purchase of a house or after the sale of a house – have even more protection under the Dutch regulation: up to €500,000 for a period of three months – and that’s on top of the already guaranteed €100,000.

Accountholders in such situations have to be alert though: they should report their situation to the DNB, because it is impossible to identify temporarily high bank balances.

There is also an investor compensation system. This protects a maximum of €20,000 ($21,900) in case a Dutch bank is unable to return securities that have been registered under the name of an accountholder by an investor.

The Dutch system protects private citizens (adults as well as minors), sole proprietorships, managers and shareholders of bankrupt banks, associations, foundations and enterprises. It also protects the money Dutch citizens and foreigners have parked at foreign banks with a branch established in the Netherlands.

Banks from the European Union, Norway, Iceland and Liechtenstein that do not have headquarters in the Netherlands do not fall under the deposit guarantee regulation.

When a bank falling under the guarantee system goes bust, accountholders should file a request to reclaim their money, using a standard form. They will get their money back within 15 days. In 2021 this term will be brought down to 10 days and by 2024 to seven working days.

All these options should obviously become a part of a similar guarantee regulation in St. Maarten and Curacao but the question remains how far the financial system can go with its maximum guarantees. If the system remains shaky, or the maximum guarantee is too low, it could inspire large accountholders to park their money in a jurisdiction where their assets are better protected.

Under the current rules it seems rather risky to park money at a credit union or to put more than 10,000 guilders in the bank, even if it has a proper license from the Central Bank.

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Related articles:
Plan for deposit guarantee regulation: too little, too late
Depositor’s guarantee system in Holland explained (in Dutch)