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Personal Bank Account

A personal bank account is the most direct, convenient, and transparent form of exercising legal ownership over financial assets.

Personal bank accounts are typically funded via dividends derived from the beneficiary's business proceeds, the sale of a business held in personal name, or the beneficiary's executive salary and bonus payments.

Personal accounts are used for depositing personal savings and making day-to-day regular lifestyle and credit card expenses for the account holder's own personal needs, in addition to making long-term investments.

Advantages of Personal Accounts

• Relatively quick and easy opening procedure

• Lower risk scoring and less transactions monitoring in comparison with more complex holding structures

Disadvantages of Personal Accounts

• Low level of asset protection

Deposit Insurance in Switzerland

In Switzerland, personal accounts (and legal entities) regardless of domicile benefit from deposit insurance in the amount of CHF 100 000 paid out within 20 days per customer and per bank in the event of (i) compulsory liquidation or (ii) any other type of bank closure.

Swiss deposit insurance first came into play on a large scale in October 1991, when Spar- und Leihkasse Thun, a Swiss regional lender, was shut down.

In the wake of the financial crisis of 2008 and the closure of Iceland's Kaupthing Bank in Geneva, Switzerland introduced the so called "125% Rule" which increased deposit insurance to CHF 100 000 and stated that Swiss banks must hold 125% of protected deposits in readily realisable assets in Switzerland at all times.

Depoit insurance in Switzerland is managed by Esisuisse ("Einlagensicherung der Schweizer Banken und Effektenhändler"), an association counting among its members all Swiss banks and securities firms with branches in Switzerland.

In the event of bankruptcy of a Swiss bank, Esisuisse is empowered to call in insured deposits from all its members by direct debit and forward the funds to the liquidator who will then transfer them to another bank as instructed by the client. The other banks, in turn, receive reimbursement of their contributions at a later stage, when the insolvent bank is liquidated.

Nevertheless, the Swiss deposit insurance mechanism is only able to cover defaults of individual banks - it cannot mitigate major disruptions to the entire financial system.

In recent Swiss history, only one Swiss bank went bankrupt in the full sense of the term (Spar- und Leihkasse Thun) whereas two banks were forcefully closed by the Swiss regulator:

1991: Bankruptcy of Spar- und Leihkasse Thun | Default related to real estate mislending (Bund)

2008: Closure of Kaupthing Bank Luxembourg, Geneva branch | Closure related to the Icelandinc financial crisis (Finma press release)

2015: Closure of Hottinger & Cie. | Closure related to fraud within the bank (Finma press release)

Bank Run in Switzerland in 1991

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