Recommendation Savings account in EUR

Finance, Taxes, Banking, Insurance and Retirement
1
I received a note that, as a now resident of Switzerland, I will have to close my bank account in my EU home country (I hid it for a while) where I have stored some of my savings (<50K) in euros. I therefore need to look for an alternative bank that offers a savings account in euros (I don't want to convert them to CHF yet) and accepts residents of Switzerland. UBS does offer this but with a pretty low interest rate (0.75% if I understand correctly), which is way lower than the 1.8% that I currently receive.

Do you have an advice on the choice of bank that offers:

- A savings account (no card etc. are needed)

- A decent interest rate

- Some certainty that my money will be secured in case something happens with the bank (you never know )

Thanks in advance!

2

DKB is what I went for and I am pretty happy with my choice.

https://www.dkb.de/privatkunden/girokonto

3
Most big banks have good rates or fixed term deposits, but require at least the equivalent of 100k CHF, plus your money is locked from 1 month to 1 year. I have both with UBS and PF.

But I don't understand this, who asked you to close your EUR account abroad? Because this is not the case for me, I still have EUR accounts in 2 EU countries and the U.K. and these banks know my full details (address, etc.) And this is definitely not a problem in CH, as a matter of fact I am declaring them in my tax return every year.

4

If you open an Interactive Brokers account (beside a great trading platform) you’ll get good interest rate on your cash (e.g. current EUR is 3.4%), it is SIPC insured (so 250k USD for cash) and there are no limitations of withdrawal or funds being locked.

https://www.interactivebrokers.com/e…rest-rates.php

The interests are not paid on the first 10k, so it might not be worth for small amounts, but the rate is so better than your current one (1.8%) that you will be even already with 21k EUR cash in your account

Also, once you have an IB account you might as well invest your cash into some money market fund (e.g. https://www.justetf.com/en/etf-profi…58497#overview ) boosting your protection to 500k (because now it is a security) and making all cash work, not only past first 10k

5
I have a good amount of USD there, but I am a bit hesitant to move more assets, even though they pay a bit better than the local banks here. But how safe is the money? Is this SIPC insurance only for USD or for USD equivalent as well?

6

SIPC insurance covers non-USD cash as well. The nuance (for all currencies) is that - at least in theory - only the cash that was kept with the intent of purchasing securities is covered. I never figured out if it ever mattered in practice. See https://www.sipc.org/for-investors/i…%20Act%20(SIPA.

7
Why would there be a limit on your protection for a security? The ETF should be held in a segregated custody account in your name. Likewise the instruments in the money market fund should be segregated from the fund manager’s balance sheet too. The risk is default by the underlying issuer.

8

Funds should be segregated.

But in reality when a brokerage is about to fail, that’s when they are most likely to dip into client accounts to tide over cash flows.

Also - if the brokerage fails, investors are expected to pay costs incurred by administrators in reallocation.

For an example of this - have a look at what happened to Beaufort Securities when it collapsed in 2018. I was a client of their at the time, and was told I to expect only about 85% of my assets to be returned. It wasn’t much a problem because I had zero balance anyway.
https://www.fosterdenovo.com/my-reso…ties-happened/

Interactive Brokers seem to be quite safe. It has a credit rating of A- on S&P. Not so long ago they were at BBB: a rating for which about one in twenty companies have gone into administration within a 10 year period.

They also have a history of closing down trading on their platform to protect themselves, which some might say is more indicative of their financial position than their S&P rating.