Deposit insurance is limited and does not, by itself, replace an assessment of a bank's reliability. A guarantee scheme pays a fixed sum per depositor per licence and nothing above it; what stands behind a larger balance is the bank's own loss-absorbing capital, the resolution regime that decides who takes losses in what order, and the depositor's own spread across independent licences. Globally systemically important banks have the largest capital buffers; the failures of 2023 show the practical importance of these mechanisms. Banks in different countries are compared in banks by jurisdiction; the guarantee limits and payout periods scheme by scheme, together with the two protection regimes that are not deposit insurance — payment safeguarding and investor compensation — are in the client asset protection map; the price of a non-resident account and the practice of opening one are in personal accounts abroad.
Depositor protection mechanisms
The protection mechanisms serve different functions. The statutory guarantee scheme pays quickly but only up to a limit. The bank's own balance sheet provides further protection. The law ranks claims once the first two mechanisms are exhausted.
| Layer | What it is | Where it stops |
|---|---|---|
| Guarantee scheme | A statutory payout per depositor per licence out of a pre-funded industry pool; the limits of 28 schemes with their currency scope and eligible-depositor rules are on one table in the client asset protection map | At the limit. The payout period, the foreign-currency leg of a multi-currency account and who counts as an eligible depositor differ scheme by scheme |
| The bank's own capital stack | Common Equity Tier 1 of at least 4.5% of risk-weighted assets under Basel III plus the conservation and countercyclical buffers; for a G-SIB an extra surcharge of 1% to 3.5% and a layer of bail-in debt, the total loss-absorbing capacity set by the FSB term sheet at 18% of risk-weighted assets | When losses exceed the stack. AT1 and TLAC instruments are written down or converted by the regulator before a depositor loses anything, and in 2023 that happened ahead of the shareholders |
| The resolution regime | The order in which claims are paid once the bank fails. In the EU under the Bank Recovery and Resolution Directive the scheme standing in the shoes of insured depositors ranks first among unsecured claims, then natural persons' and small companies' deposits above the limit, then ordinary unsecured creditors; in the United States domestic deposits rank ahead of general unsecured creditors under depositor preference | The balance above the limit is an unsecured claim whose rank depends on the jurisdiction: preferred over ordinary creditors in the EU and the US, an ordinary third-class claim in Switzerland above the privileged CHF 100,000 |
Protection is counted per licence, and the sum above the limit is spread across independent licences and legal systems rather than across branches of one group. Which entity actually books the account, and therefore which scheme and which insolvency law apply, is explained in booking centres.
Globally systemically important banks
The Financial Stability Board, with the Basel Committee, publishes the list of global systemically important banks every November. The 2025 list names 29 banks, the same 29 as in 2024, and sorts them into buckets by systemic importance: the higher the bucket, the larger the surcharge to Common Equity Tier 1 capital, applied fourteen months after the list, from 1 January 2027 for the 2025 allocation. Two banks moved up in 2025, Bank of America and Industrial and Commercial Bank of China from bucket 2 to bucket 3, and one moved down, Deutsche Bank from bucket 2 to bucket 1. The fifth bucket has never been used.
| Bucket | CET1 surcharge | Banks on the November 2025 list |
|---|---|---|
| 5 | 3.5% | None |
| 4 | 2.5% | JPMorgan Chase |
| 3 | 2.0% | Bank of America, Citigroup, HSBC, Industrial and Commercial Bank of China |
| 2 | 1.5% | Agricultural Bank of China, Bank of China, Barclays, BNP Paribas, China Construction Bank, Goldman Sachs, Groupe Crédit Agricole, Mitsubishi UFJ Financial Group, UBS |
| 1 | 1.0% | Bank of Communications, Bank of New York Mellon, Deutsche Bank, Groupe BPCE, ING, Mizuho Financial Group, Morgan Stanley, Royal Bank of Canada, Santander, Société Générale, Standard Chartered, State Street, Sumitomo Mitsui Financial Group, Toronto-Dominion, Wells Fargo |
What the status gives a depositor is a larger capital buffer, the TLAC requirement, which is a stack of capital and bail-in bonds that absorbs losses without taxpayer money, and a group-wide resolution plan reviewed by the FSB every year. In financial distress, losses are taken by shareholders and by the holders of AT1 and TLAC debt while the depositor stands ahead of them in the queue. What the status does not give is a guarantee: Credit Suisse sat in bucket 1 of the November 2022 list and was gone four months later, and its resolution plan was never triggered because the Swiss authorities chose a takeover under emergency law instead. The status also attaches to the group, whereas the depositor's contract is with one licensed entity: the booking entity's own capital, its own rating and its own scheme are what matter on the day.
What 2023 showed
In three months of 2023 a globally systemically important bank ceased to exist and four US banks failed. Each episode showed the importance of a different protection mechanism.
| Bank | Date | What happened | Depositors | Who took the loss |
|---|---|---|---|---|
| Silvergate Bank | 8 March 2023 | Voluntary wind-down after the crypto-exchange deposit base left | Repaid in full | Shareholders |
| Silicon Valley Bank | 10 March 2023 | Closed by the California regulator and placed into FDIC receivership after losses on long-dated securities; around US$42 billion of withdrawal requests on 9 March alone, with roughly 94% of deposits above the insured limit | All deposits honoured under the systemic risk exception of 12 March 2023 | Shareholders and the holding company's bondholders |
| Signature Bank | 12 March 2023 | Closed by the New York regulator; crypto clients held roughly a fifth to a third of deposits | All deposits honoured under the same exception | Shareholders and bondholders |
| Credit Suisse | 19 March 2023 | Takeover by UBS for CHF 3 billion in stock, arranged by the Swiss authorities under emergency ordinance and approved by FINMA; about CHF 16 billion of AT1 bonds written down to zero | Untouched | AT1 holders in full, shareholders in part |
| First Republic Bank | 1 May 2023 | FDIC receivership and same-day sale to JPMorgan Chase; about US$229 billion of assets, the largest US bank failure since 2008 | All deposits assumed by the acquirer | Shareholders and bondholders |
Four lessons follow. First, the limit is hard: everything above US$250,000 in the US or €100,000 in the EU becomes a claim on the receivership, and the 2023 rescue of uninsured depositors was a policy decision taken twice in one week, not a rule that will repeat. Second, concentration kills, both by client, through the share of uninsured money, and by sector: a homogeneous deposit base leaves all at once, whether it is labelled startups or crypto. Third, a subordinated holder can be zeroed ahead of a shareholder: the Credit Suisse write-down inverted the order that Basel III logic assumes, and it remains in litigation before the Swiss courts. Fourth, a digital run moves tens of times faster than in 2008: Washington Mutual lost US$16.7 billion over ten days; Silicon Valley Bank faced US$42 billion of requests in one day, and liquidity buffers sized for the previous crisis did not hold.
Ratings and the numbers behind them
Moody's, S&P and Fitch assess a bank's probability of default on their own scales, from Aaa or AAA downward, reflecting both standalone strength and the likelihood of external support. The practical markers are investment grade against speculative grade, the direction of the outlook, and the gap between the group's rating and the rating of the specific subsidiary that books the account. A rating is an opinion on creditworthiness, not a guarantee, and it lags: Credit Suisse remained investment grade almost to the end.
Behind the rating sit numbers the bank publishes itself, quarterly, in its Pillar 3 disclosures: the CET1 ratio, the liquidity coverage ratio, the share of uninsured deposits, the concentration of the deposit base by sector, and the structure of the securities portfolio, above all how much sits in long-dated paper held to maturity and therefore not marked to market, as it did at Silicon Valley Bank. A rating that stays stable while those figures move is the lagging signal; the figures are the leading one.
Assessing a bank before placing capital
The assessment starts with the entity, not the brand: the licence that books the account, the scheme attached to it and the insolvency law of that jurisdiction. Then the entity's own numbers rather than the group's: whether it carries a rating of its own, where its CET1 and liquidity coverage ratios sit, how concentrated its deposit base is and how much of it is uninsured. Then the group is assessed: G-SIB status and the TLAC stack, which strengthen protection without providing a guarantee. The amount to place is decided after that: cash held at one licence stays within the limit, and the rest is either spread across independent licences and legal systems or moved out of cash into securities that sit outside the bank's balance sheet, the mechanics of which are set out in securities custody. For the private-banking tier the same test is applied to each booking platform separately, as private banking sets out.
Q/A
Is a globally systemically important bank safer than a smaller one?
It carries a larger capital buffer, TLAC bail-in debt and a resolution plan reviewed every year, so the probability that a depositor absorbs a loss is lower. It is not immune: Credit Suisse was a G-SIB and disappeared in March 2023. The status also belongs to the group, while the deposit is a claim on one licensed entity whose own capital and scheme are what count.
Will uninsured deposits be rescued again as they were in 2023?
There is no basis to rely on it. The systemic risk exception invoked for Silicon Valley Bank and Signature Bank was a discretionary decision by the US Treasury, the Federal Reserve and the FDIC, and First Republic's uninsured depositors were saved by an acquirer, not by a rule. Above the limit a deposit remains an unsecured claim.
Does a high credit rating guarantee the deposit?
No. A rating is an opinion on the probability of default and it lags the numbers: Credit Suisse stayed investment grade almost to the end. The leading indicators are the bank's own quarterly disclosures, above all the CET1 ratio, the liquidity coverage ratio and the share of uninsured deposits.
What happens to a deposit above the guarantee limit when a bank fails?
The scheme pays up to the limit and takes the depositor's place in the queue for that amount. The remainder is an unsecured claim whose rank depends on the jurisdiction: in the EU and the United States a natural person's deposit ranks ahead of ordinary unsecured creditors, in Switzerland the part above the privileged CHF 100,000 is an ordinary claim. Recovery then depends on what the estate yields.
Are securities in custody safer than a deposit?
They are protected by a different mechanism. Securities sit outside the bank's balance sheet and return to the owner past the insolvency estate, whereas cash on account is a claim on the bank covered only up to the limit. The caveats are the length of the custody chain and whether securities lending or rehypothecation has been agreed, which can put the securities back onto the bank's side of the line.