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I am just checking this FinTech startup called Raisin (previously SavingGlobal) where they advertise that you can make deposits on banks across Europe. They say, that each deposit is 100% covered by national deposit guarantee schemes. But if I make a decision to make a deposit through their platform to a bank in Italy, is my deposit really covered, even though I do not have Italian citizenship?

mhoran_psprep
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Jernej Jerin
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    Why would you _want_to scatter your money across multiple countries, and why can't you do that without this service? Any thing you're describing as a "scheme" is probably worth avoiding. – keshlam Mar 12 '16 at 17:14
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    @keshlam I do not know if you checked the site, but by their press release they seem to be pretty legit, also there is lots of info about them on crunchbase. Why would I want to use their service? Well interest rates are crappy here in Slovenia (~1%), as well as Germany, while some other European countries have higher interest rates. Therefore by using this service you can get higher interest rates without much additional risk. Well that is what the theory says, this is why I am posting this question about potential danger of deposits not being covered if you are not a citizen of that country. – Jernej Jerin Mar 12 '16 at 17:27
  • If banks are nationally insured, that usually covers all depositors, not just citizens. Of course all that does is protect you if the bank completely collapses, usually only up to some limit, and there's no promise that recovering your money in that case will be quick or easy. For more details you'd need legal advice in every country under consideration. Personally, I still think this sounds dubious. – keshlam Mar 12 '16 at 17:30
  • Remember that if interest rates are higher (for the same currency) in another country, it implies that there is higher risk due to, for example, risk of bank collapse in that country. See answers regarding a similar question about Russian interest rates, here: http://money.stackexchange.com/q/15246/44232 – Grade 'Eh' Bacon Jul 04 '16 at 17:49
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    Also - if interest rates are higher but the deposits are in a foreign currency, saving in that currency introduces an entirely new type of risk to your savings: that your home currency and the foreign currency will fluctuate, relative to each-other. See related answer here: http://money.stackexchange.com/a/66213/44232 – Grade 'Eh' Bacon Jul 04 '16 at 17:51
  • Reminder: deposits being protected dies not mean you can't lose money on exchange rates and such. Their guarantee may be correct but irrelevant, depending on what is actually being done with the money. – keshlam Jul 31 '16 at 18:35
  • Also, the national governments of the banks where the money is placed may cover the depositors of those banks, but your money is not in those banks. Your money is entrusted to Raisin. THEIR money is on deposit in those banks, and insured. Any number of problems can cause you to be unable to get your money back from Raisin. The image of having all the juice dried out of my deposits isn't good for me. Seriously, what this sounds like, is you're depositing money at a savings bank, which invests in other banks. But in this case, the savings bank isn't a bank but some kind of broker. – Xalorous Aug 30 '16 at 20:12

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The simple answer is: Yes, in the European Union, individual deposits in banks are protected up to €100,000 per person per bank even if you are depositing through an intermediary. You can find out more from the EU FAQ on the subject. as well as the pages of the regulators of each country (normally linked from each bank and also linked from raisin dot com).

The scheme raisin dot com is proposing should be protected too since they say that they keep your money in an account at Keytrade Bank in Belgium. You should check the two last answers in their "how it works" page

There are some special issues you should know about though.

  • if a bank were to fail you may have to wait up to 20 days to get your money - this will fall to 7 days only in 2024
  • sometimes, in some countries the same bank has two different names e.g. as part of a group - you should check the name
  • there is an actual deposit insurance scheme in each country which could theoretically run out of money - normally the government would step in, but if they didn't then you only get back proportionally
  • some banks (e.g. in Germany) have additional protection which may go beyond this.
  • if you have two deposits in the same bank then the coverage is only €100,000 total.

I think that the thing I'd worry more about is the reliability of the company. Is it really doing what it says it does? I hadn't heard of it before. However, there are real articles in European newspapers about raisin dot com so it seems legitimate.

Michael
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  • Wasn't able to post links, in the comment so here goes.
    • Rasin's list of guarantee insurance per country : https://www.raisin.com/deposit-guarantee/
    • EU FAQ http://europa.eu/rapid/press-release_MEMO-14-296_en.htm

    https://www.raisin.com/deposit-guarantee/

    • irish times article https://www.irishtimes.com/business/personal-finance/pan-european-platform-opens-to-irish-savers-offering-returns-of-2-2-1.2607739
     – Michael Jul 31 '16 at 17:47