[Swiss Bank assesment - safe?]

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Topic Author
borbekk
Posts: 36
Joined: Mon Jun 15, 2020 5:58 pm

[Swiss Bank assesment - safe?]

Post by borbekk » Thu Jul 30, 2020 6:12 am

Dear bogleheads,

I have a large amount of money (all i have) in a wealth management bank. It is a swiss bank - Indosuez, which is owned by French bank Credit Agricole.
Is it save to hold my money there? Is there any risks?

Thanks

lakpr
Posts: 5711
Joined: Fri Mar 18, 2011 9:59 am

Re: Bank assesment

Post by lakpr » Thu Jul 30, 2020 7:46 am

Money in foreign banks is not protected by FDIC, so I would say, no it's not safe to hold money in that bank. Also, assuming you are a US resident (regardless of nationality, if you spend more than 183 days in the US in 2020), you are expected to file a FBAR form declaring your foreign assets if they exceed $10k *at any point in time* throughout 2020. I assume you will be doing that.

Topic Author
borbekk
Posts: 36
Joined: Mon Jun 15, 2020 5:58 pm

Re: Bank assesment

Post by borbekk » Thu Jul 30, 2020 11:11 am

lakpr wrote:
Thu Jul 30, 2020 7:46 am
Money in foreign banks is not protected by FDIC, so I would say, no it's not safe to hold money in that bank. Also, assuming you are a US resident (regardless of nationality, if you spend more than 183 days in the US in 2020), you are expected to file a FBAR form declaring your foreign assets if they exceed $10k *at any point in time* throughout 2020. I assume you will be doing that.
thanks for the reply.

Gill
Posts: 6450
Joined: Sun Mar 04, 2007 8:38 pm
Location: Florida

Re: Bank assesment

Post by Gill » Thu Jul 30, 2020 11:18 am

borbekk wrote:
Thu Jul 30, 2020 11:11 am
lakpr wrote:
Thu Jul 30, 2020 7:46 am
Money in foreign banks is not protected by FDIC, so I would say, no it's not safe to hold money in that bank. Also, assuming you are a US resident (regardless of nationality, if you spend more than 183 days in the US in 2020), you are expected to file a FBAR form declaring your foreign assets if they exceed $10k *at any point in time* throughout 2020. I assume you will be doing that.
thanks for the reply.
Not the answer you were looking for?
Gill
Cost basis is redundant. One has a basis in an investment | One advises and gives advice | One should follow the principle of investing one's principal

Topic Author
borbekk
Posts: 36
Joined: Mon Jun 15, 2020 5:58 pm

Re: Bank assesment

Post by borbekk » Fri Jul 31, 2020 4:59 am

Gill wrote:
Thu Jul 30, 2020 11:18 am
borbekk wrote:
Thu Jul 30, 2020 11:11 am
lakpr wrote:
Thu Jul 30, 2020 7:46 am
Money in foreign banks is not protected by FDIC, so I would say, no it's not safe to hold money in that bank. Also, assuming you are a US resident (regardless of nationality, if you spend more than 183 days in the US in 2020), you are expected to file a FBAR form declaring your foreign assets if they exceed $10k *at any point in time* throughout 2020. I assume you will be doing that.
thanks for the reply.
Not the answer you were looking for?
Gill

Well, i really want to understand how safe is my bank. My family also holds money there ( and they are not us citizens) and they are not planning to move. I am just a bit nervous to hold all our money in one place, and i want to understand, should i be?

Valuethinker
Posts: 40488
Joined: Fri May 11, 2007 11:07 am

Re: [Swiss Bank assesment - safe?]

Post by Valuethinker » Fri Jul 31, 2020 7:39 am

borbekk wrote:
Thu Jul 30, 2020 6:12 am
Dear bogleheads,

I have a large amount of money (all i have) in a wealth management bank. It is a swiss bank - Indosuez, which is owned by French bank Credit Agricole.
Is it save to hold my money there? Is there any risks?

Thanks
Most countries have a deposit insurance scheme.

Is this bank (in the USA) a member of FDIC? If not, are deposits insured under a Swiss scheme? (places like Jersey and Guernsey don't actually have deposit insurance).

I must admit I think of Indosuez as a French bank

https://en.wikipedia.org/wiki/Cr%C3%A9d ... 988_-_2001 I remember when CA bought them out.

Still if your account is in Switzerland you need to find out what Swiss protections there are for depositors. In the Eurozone (ie not Switerland, but France) it would be EUR 100k but not backstopped by the EU government, but by the local government. The Cyprus bailout showed how painful that could be (60% "bail in" ie converted into equity and massively diluted, for all deposits over EUR 100k).

Nothing is really safe in this world, but there is "Too Big To Fail" - I'd put JP Morgan in that category, Wells Fargo, perhaps HSBC. Say the world's top 20 or so banks by assets but with concerns regarding Italian, Chinese, Russian banks in particular (not so much that they would fail, but restrictions might be put on depositors withdrawals in a crisis).

You can look up the Credit Rating of the parent (usually on a bond investors page in their Investor Relations site) but also you might be able to get a credit rating for the Swiss subsidiary.

Valuethinker
Posts: 40488
Joined: Fri May 11, 2007 11:07 am

Re: Bank assesment

Post by Valuethinker » Fri Jul 31, 2020 7:50 am

borbekk wrote:
Fri Jul 31, 2020 4:59 am
Gill wrote:
Thu Jul 30, 2020 11:18 am
borbekk wrote:
Thu Jul 30, 2020 11:11 am
lakpr wrote:
Thu Jul 30, 2020 7:46 am
Money in foreign banks is not protected by FDIC, so I would say, no it's not safe to hold money in that bank. Also, assuming you are a US resident (regardless of nationality, if you spend more than 183 days in the US in 2020), you are expected to file a FBAR form declaring your foreign assets if they exceed $10k *at any point in time* throughout 2020. I assume you will be doing that.
thanks for the reply.
Not the answer you were looking for?
Gill

Well, i really want to understand how safe is my bank. My family also holds money there ( and they are not us citizens) and they are not planning to move. I am just a bit nervous to hold all our money in one place, and i want to understand, should i be?
The really only "truly safe" investments in the world are the bonds issued by a handful of countries:

- developed countries with a long history of borrowing and repaying debt, even in financial stress - UK, Canada, Australia, USA, Germany (if we except what happened 1933-45), France (markets are not quite so trusting on that one), Japan, Switzerland, Sweden, Netherlands (again, ex WW2), Finland -- I have probably unfairly missed a few

- importantly most of those countries have the privilege of issuing bonds in their own currency. Thus, they cannot default -- they can always print more money to buy new bonds to repay the ones being redeemed. The downside of that is their currencies can collapse when the market figures out that they are doing that, in lieu of making actual sacrifices to repay those debts (higher taxes, lower consumption)

One could argue that one wants to buy the TIPS bonds/ Real Return bonds of those countries. Creditor risk protected by the national status, inflation risk protected by the instrument.

- countries that have such strong financial fundamentals that even given their problems, they probably can and will repay their debts. Norway (which is also in the first category) + the rich small oil states (UAE, Qatar, Kuwait) + China + South Korea & Taiwan (barring new wars) + Singapore (probably safer than many western European countries, as a borrower)

When you get to bank deposit insurance - the FDIC in the US is the granddaddy of such, as long as the US Congress funds it (and it would be politically suicidal not to) then US deposits are pretty safe. Other countries have similar arrangements.

Topic Author
borbekk
Posts: 36
Joined: Mon Jun 15, 2020 5:58 pm

Re: [Swiss Bank assesment - safe?]

Post by borbekk » Fri Jul 31, 2020 5:55 pm

Thanks a lot for great answers, really helpfull, looking into rating is simple and good idea. ill check with indosuez about deposit insurance. But for example they ve put my money in CD of Credit Agricole, and as i understand that i am not insured in that case.

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