Provided that they need not retrieve its too quickly

Should I withdraw the money deposited in banks

Many readers have asked us the question yesterday. Tell them: the French banking system is highly regulated and strictly governs the failure of credit institutions. If a bank goes bankrupt, the deposit insurance fund compensates thus height of 70,000 euros customers fully covering the holdings of at least 90 of depositors. This mechanism plays for all types of deposits: deposits, term deposits, accounts on passbooks, savings-housing plans, etc. As the holders of securities, they are also reimbursed at height of 70,000 euros for unavailable titles, on the basis of the course at the date of their unavailability. All banks approved by the Committee of credit institutions and investment firms (CECEI) must adhere to the Fund of guarantee of deposits (1). The latter has a liquidity of 1.8 billion outstanding.

What is for customers of a foreign bank

For customers of a foreign bank whose headquarters is located outside the European Community, things are clear: its subsidiary must be approved in France and is therefore the deposit guarantee mechanism. The clients of a foreign bank of Community origin shall, look closer. If it is a subsidiary, it must be approved by the French authorities. Here again, depositors are covered by the deposit guarantee fund. This is the case, for example, Fortis Bank France, which is "a French banking law to the legal obligations and regulatory French", as reminded it yesterday the subsidiary of the belgo-néerlandais group in trouble. "As such, she, said Fortis Bank France contributes to the deposit guarantee fund and provides the same guarantees as other French banks."

In the case of a branch, on the other hand, it is a law of its country of origin. The customers of ING Direct, which is a branch of ING, are therefore subject to the Dutch system. Note that the amount of compensation is markedly more low around 20,000 euros in most other European countries (Netherlands, Luxembourg, Great Britain, etc.) in France.

And savings

Protection is similar. All insurers of persons registered in France, including the non-Community foreign subsidiaries, are required to adhere to the FGAP (insurance guarantee fund). The Fund has, for 2008, of resources EUR 500 million, corresponding to 0.05 of the mathematical provisions for all the undertakings concerned. As for deposits, them are placed actually representative provisions of rights arising from insurance contracts are protected height of 70,000 euros, and even of 90.000 euros for annuities of foresight (death, disability and disability).

It is the insurance and mutual (ACAM) control authority decides to initiate the procedure that could lead to the Fund. It proposes beforehand, by tender, a resumption of the commitments of the failing firm with a transfer of portfolio to one or more other insurers. If the tender does not result, or partially, then the FGAP intervenes within the limits of the ceilings.

More specifically, the ceiling of 70,000 euros is insured and company. If an individual has purchased several contracts of insurance with a company, he does will be compensated only to height of 70,000 euros for all of its contracts. On the other hand, it may be compensated more than once if it holds contracts with various companies. This warranty is that savings be placed funds in euros or in units of account. The vast majority of the subscribed contracts would thus covered.

In practice, the probability of failure of a French life insurance company is found to be extremely low. Europavie is the only life insurer went bankrupt since 1945, leaving in 1997 net liabilities of EUR 18.3 million, corresponding to one third of its balance sheet total.

Is life insurance still a placement course

This question, insurers (and bankers) are a resounding "Yes". Placed money on a contract of insurance life euro (75 of the contributions) are guaranteed by the insurer. "The structure of asset/liability management of insurance companies makes the shelter." "In the case of contracts or money in euros, the assets placed in representation of the commitments made by the insurer are invested in nearly 80 in obligations on the State and the State is not bankruptcy", said Claude Fath, President of the association of savers AGIPI. For memory, end of 2007, investment of the French life insurance companies were composed to two-thirds by securities and UCITS in fixed income. It remains that the current environment is likely to weigh on the rates of adjustment served in 2008 and 2009. "Serve more the average performance of the loans of State after deduction of costs of management led necessarily to take some risks," said Claude Fath.

Should we ban contracts in units of account

Although this may seem surprising, insurers still recommend to invest in units of account contracts the risk is then worn by the insured when markets fall. Provided that they need not retrieve its too quickly. "It is in periods of losses that it produces capital gains of tomorrow," said Claude Fath. How to counter the very strong current volatility "By adopting partly and gradually units of account, in other words by spreading the equity investment to smooth the risk", says Michelle Villatte, President of the Institute of education of the Profession of insurance. "Subscription" systems provided for in most contracts allow.

Are French banks strong

Yes. As all institutions operating in the Bank Finance and investment (BFI), the major French banks have been affected by the crisis of the "subprime". But they are rather well, despite write-downs of assets of approximately EUR 17 billion since the beginning of the year. To cope with these losses, they had with the exception of BNP Paribas strengthen their own funds in recent months. If they appear today better bearing, it probably also see the strength of the model of "the French universal bank" ("Les Echos" of yesterday). Unlike some of their foreign rivals which depend exclusively markets, French banks were able to strike a balance between retail banking in France and abroad, specialized financial services, bank financing and investment and asset management.