If You Had to Open an Account in a Bank to Save All Your Savings, Which One Would You Choose?

Although many seek in which banks pay more interest, there are few who seek a safe bank to save savings. I also want to make my money profitable, but the aversion to loss is stronger and sometimes irrational. 

At every time, I find streaks in which people are more concerned with knowing which banks are safer to save savings, than where they pay more interest or how to make money profitable. And now that electoral times are approaching, where some economic programs scare, these fears emerge again.

Obviously, I have my opinion about it, which I will now tell you, but I wanted to ask you where would you save your savings if you had to open an account in a single bank?

Sometimes we get a little crazy about the Deposit Guarantee Fund (FGD) and the coverage of € 100,000 per holder and account. But the truth is that it is only a guarantee on paper, not so much in reality.

If there really was a bankruptcy of an entity, as it has recently happened with Banco Madrid or with Banco Popular (although this has been a somewhat exceptional case in the form), that this guarantee could be carried out, would depend largely on the size of the entity or entity affected.

If a big bank fell, it would really be a problem. In practice, today, there would not even be money to protect the depositors of a small bank. They are the rest of surviving entities when it happens, those that have to recapitalize and to put it in some way, put “boat” to pay the broken one, if there is one.

So that of the FGD is rather a guarantee with a placebo effect for the saver. It’s there, but in practice, it doesn’t help much.

With the latest solvency data in hand, if we take the ranking of the safest banks based on their coverage and solvency ratio, you will see that the most solvent bank in the Spanish financial system is Laboral Kutxa followed by Kutxabank. But they are leaders of commercial banks. Now I will explain why I make this distinction.

The truth is that, as a bank to save money, any of the first insolvency would be a good choice. Laboral Kutxa, Kutxabank, Abanca or Bankia. And as good entities that do not need liquidity, they will pay the savings at almost zero percent, in the context of current rates. Otherwise, it would be strange.

Are these the safest entities to save the savings?

Actually, commercial banks always have more danger than banks oriented exclusively to wealth management or operating as investment banks. Because the imbalance between credit and deposits is always the factor that can put them in trouble. And since banks that are dedicated to managing assets, do not lend money, they should be much safer.

In fact, if we look, we will see how Andabank, Inversis Banco, Renta4 bank, Banca March or Banco Mediolanum, to name a few, almost double the average solvency ratio of commercial banks. With a Tier1 greater than 25% in some cases.

Then if the capital ratio is to be the benchmark for opening an account in a secure bank, I would clearly prefer any investment bank to deposit my money. Even exceeding € 100,000 per holder and account. I would possibly stay with Banca Marcha or Andbank.

But all this is always a half-truth. Really, if you want to protect the savings, what you should do is take your money out of the bank’s balance. Because it is the money that is in sight accounts and deposits, the one that is really most unprotected against a bankruptcy or the collapse of a financial entity.

I have commented on many other occasions when this topic has come up. Any money you have in investment funds, fixed income securities or registered shares, is much safer than the money you can have in the most solvent bank.

Why? Well, in the end with an action or with the shares of a fund, you are buying a percentage of a real asset. Of a company, its assets, and its activity. And the depositing bank is nothing more than that. An intermediary that sells you the fund or through which you buy some shares or a simple custodian bank. But what you buy is in your name and you can take it to another entity whenever you want. The intermediary bank or depositor may never use these assets to pay its creditors in case of bankruptcy.

That is why sometimes when we think of a safe bank to save money, we forget these things. And we don’t realize that maybe, what suits us best, is a wealth management bank, a fund distributor or a broker, and not a commercial bank.

Now, if what worries you is the security of your savings from a possible confiscation or expropriation of assets, you might think that your only way out is to open an account in a foreign bank.

It has been said things like the possibility that all private pension plans could be expropriated by force and managed by a public entity. Or that you have to tax with 3% the assets with more than 1 million euros. Either thing would be outrageous. And although it is true that some of those things there are those who defend them, from the saying to the fact, there is a stretch.

Can you imagine that they touch you 1.5 million in a primitive after taxes and that every year they were taking away € 45,000? In 10 years they would have taken a third of your prize.

I do not quite know today that sending money abroad, supposes a greater degree of protection, insofar as it is necessary to inform through the model 720 of goods abroad. Then the state would know you have money out. The only thing that would free you from such a stumbling block in case it took effect would be a change of tax residence. That is, you go to Andorra or any other neighboring country or not.

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