What happens if my neobank fails?

It depends on the company that holds your money. A bank and an e-money institution fail in very different ways.

Bank Credit institution

Your balance is a deposit with the bank. In the EU, if the bank fails, the national deposit guarantee scheme repays eligible deposits up to EUR 100,000 per person and bank (Directive 2014/49/EU).

E-money E-money institution

Your balance is not a deposit. The company has to safeguard customer money, usually in a separate account at a partner bank or in low-risk assets. No deposit guarantee applies; in an insolvency the safeguarded money is returned through the insolvency process.

Bank Bank (credit institution)

  1. 1. The bank failsThe supervisor or a court finds the bank cannot repay deposits.
  2. 2. The guarantee scheme steps inThe national deposit guarantee scheme of the bank's licence country takes over the payout.
  3. 3. You are repaidCovered deposits are repaid up to EUR 100,000 per person and bank. EU law sets a payout deadline of seven working days.
  4. 4. Above the limitAnything above the limit becomes a claim in the bank's insolvency.

E-money E-money or payment institution

  1. 1. The company failsAn administrator or liquidator is appointed for the e-money or payment institution.
  2. 2. The safeguarded pool is identifiedCustomer money that was safeguarded is kept apart from the company's own assets.
  3. 3. DistributionThe administrator returns the safeguarded money, less the costs the law allows; there is no fixed payout deadline.
  4. 4. ShortfallsIf money was not properly safeguarded, customers may get back less, and later.

Deposit guarantee limit and payout deadline: Directive 2014/49/EU (EUR-Lex) (Articles 6 and 8). Outside the EU other rules apply. Not legal advice.