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What happens if a bank or insurance firm fails?

Things can go completely wrong for a bank or insurance firm. They can go bankrupt, just like any other business. In some cases we can take action and make sure that a bank or insurance firm is relaunched or sold. Whatever happens, we always want to limit any damage as much as possible.

When will DNB take action?

We supervise banks and insurance firms, so we can take action in various ways if one of them should run into trouble. Often this helps, but not always. Like any other business, a bank or insurance firm can fail and go bankrupt. In most cases, we do not take action, as bankruptcy does not lead to major losses. But sometimes a bankruptcy can cause a lot of damage, for customers, other financial institutions or our economy. In such a situation, we do take action and ensure a relaunch or sale. The action we take is called resolution. In this way, customers continue to have access to their bank accounts or keep their insurance cover. Also, we try to prevent other financial firms from getting into major trouble, sparking a financial crisis. And we want to avoid the government having to save banks or insurance firms with taxpayers' money as happened during the 2008 crisis.

Criteria for resolution

If a bank or insurance firm is at risk of failure, we determine if resolution is needed. To do so, we establish how important the firm is to society, the economy and the financial system. We look at the following, for example:  

  • the size of the bank or insurance firm
  • the number of account holders and total savings in the bank or the number of policyholders of the insurance firm
  • how big the problems in other financial firms and the economy will be if the bank or insurance firm goes bankrupt.

Bankruptcy, sale or relaunch of a bank: what happens to my bank account?

If a bank goes bankrupt, there is the Dutch Deposit Guarantee. If your bank goes bankrupt, you will get the money back in your account, from 1 cent to €100,000 per person per bank. The Deposit Guarantee also applies when a bank is sold or relaunched. This means you will always get your money back up to a maximum of €100,000, whatever happens. When your bank is relaunched, you will keep access to your bank accounts. If the bank is sold, you will become a customer of the new bank, to ensure you can get at your money.

Bankruptcy, sale or relaunch of an insurance firm: what happens to my insurance policy?

There is no guarantee scheme for customers of insurance firms. In case of bankruptcy, customers may lose the premium they have paid and their claims. Taking out health or non-life insurance with another firm is usually not very complicated. The situation is different for life and endowment insurance policies. In that case, if your insurance firm goes bankrupt, you will lose some of the premium you may have paid for many years. And you may also lose the insurance cover under the policy. This can involve large sums of money. Sometimes we can take action and ensure that the insurance firm is relaunched or sold. In that case, you will keep your insurance policy and cover.

Bankruptcy, sale or relaunch of an investment fund

There is an investor compensation scheme that can be activated if an investment fund fails or in case of fraud, mismanagement or both. We can also apply resolution to investment funds. The same rules apply as for banks.

DNB and resolution

DNB is responsible for resolution in the Netherlands according to the law. This means we have various options to take action if a bank, insurance firm or investment fund gets into trouble. For large banks, resolution takes place at European level, by the Single Resolution Board (SRB) in Brussels.

Well begun is half done

We want to be prepared for the worst. Well begun is half done. We prepare resolution plans for each bank and insurance firm, describing the best way forward for a bank or insurance firm should it fail. These plans allow us to respond quickly if necessary. Banks and insurance funds also prepare their own plans, listing the actions that must be taken if things were to go completely wrong.

From problem to bankruptcy, relaunch or sale

Infographic about resolution

Read more about resolution

We want to limit the damage for everyone involved and make sure processes go as smoothly as possible. Regardless what happens, bankruptcy or resolution. Read more about how we apply resolution to different financial organisations.

Frequently asked questions

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