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What is an Institution Protection Scheme and am I part of one?

'European networks of savings banks and co-operative banks are currently reorganising. For some, the aim is to simplify their ownership structure and increase their solvency, for example networks of agricultural credit cooperatives in France and of mutual banks in Austria and the Netherlands. For others, the aim is to clarify their mode of governance and their internal mutual support mechanism, as is the case with networks of credit unions in France and of savings banks and co- operative banks in Germany. Finally, some networks want to strengthen their ties, for example networks of savings banks in Austria and of credit co-operatives in Spain and Italy. As a result, certain banking networks have, in the last few years or months, become more integrated in one way or another.<br/><br/>

Although they are not widely known, the relevance of IPSs is significant. According to the ECB, in the eurozone, around 50% of credit institutions are members of an IPS, representing almost 10% of total bank assets. However, that average masks wide variations because IPSs are only recognised in three countries at the moment. Germany and Austria have the main ones, and Spain has two smaller ones. Three out of four institutions belong to an IPS in Germany and four out of five in Austria. In terms of total assets, they account for 40% of the banking sector in Germany and 50% in Austria. These institutions play a major role in financing the economy but also in ensuring financial stability, not individually but collectively.'<br/><br/>

Sourcing: BNP Paribas Blog

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