State guarantee

Principle: By operation of the law (Art. 6 St.Galler Cantonal Banking Act), the canton of St. Gallen is liable for all liabilities undertaken by the St.Galler cantonal bank (the parent bank being SGKB) if the bank's own funds are not sufficient. The government guarantee does not cover the subsidiaries of SGKB.

The government guarantee covers ...
  • customer deposits (funds due to customers)
  • SGKB's bonds
  • SGKB's medium term bonds
  • fixed term deposits
  • retirement capital

Vested benefits account and saving 3-account

The SGKB guarantees assets in all vested benefits accounts and saving 3-accounts in he event of bankruptcy. As far as its own resources don't suffice, the outstanding claims will be covered by the canton pursuant to the government guarantee.

Performer 3a

The SGKB is issuer of the structured product Performer 3a and guarantees the assets invested in this product. As far as its own resources don't suffice, the outstanding claims will be covered by the canton pursuant to the government guarantee.

Saving through securities

In the event of bankruptcy, the customers' securities accounts are treated
separately and under no circumstances are they treated as as the bank's assets in the bankruptcy estate. The job related pension (2nd pillar) shares in a fund and the saving 3-shares in a fund are held in a securities account and therefore treated separately.

Not covered under the government guarantee
  • the share capital of SGKB
  • subordinated loans
  • (Loans that in the event of a company's liquidation or insolvency are repayable only after other debts have been satisfied.)
  • In the event of bankruptcy, customers' securities accounts are treated separately and under no circumstances are they treated as the bank's assets in the bankruptcy estate; this also applies in principle to other banks and as such, has nothing to do with the government guarantee
  • Business relationships with the subsidiary St.Galler Kantonalbank Germany Ltd. in Munich

It should be noted that the government guarantee is a continuing subject of political discussion in the canton of St. Gallen. Any change to the government guarantee (partial or complete cancellation) could, however, only be brought about by a change to the Swiss Cantonal Banking Act. Any such change to the legislation would require a referendum, meaning that the electorate would have the final decision.

Comparison to depositor protection

  • The government guarantee covers all customer claims that would not be covered by so-called depositor protection.
  • The Swiss Federal Act on Banks and Savings Banks ("Banking Act") states that in the event of a bank collapsing, deposits (e.g. assets on accounts, issued to the customer's name, as well as generally for medium term bonds, which are deposited in the name of the depositor at the issuing bank) of up to CHF 100'000 per depositor will be treated as preferential debt, thus taking priority over the claims of other creditors. This preferential status means that these deposits will be paid out of the insolvent bank's assets and will therefore take priority over claims by other (non-preferential) creditors.
  • Furthermore, the depositor protection scheme for banks and securities dealers guarantees payment of these deposits up to CHF 100,000 in the event of bankruptcy or of protective measures being initiated. If the bank concerned does not have sufficient assets to pay out the deposits, the payment is guaranteed by the other banks.
  • Finally, Swiss law stipulates that preferential deposits must be paid out immediately from the bank's available liquid assets separately from the collocation in the bankruptcy proceedings and in the absence of any set-off of assets of the bank. Secured deposits of up to CHF 100,000 must be paid out within three months of measures being initiated by the FINMA or liquidation proceedings being commenced against the bank.
  • There is a special privilege of CHF 100'000 for deposits from vested benefits foundations and assets held in a Pillar 3a account since the end of 2008. They are deemed to be deposits from individual pension fund members/policy holders and as such are preferential. Preferential status applies (for vested benefits foundations and assets held in a Pillar 3a account together) irrespective of other contributions from the individual pension fund member/policy holder up to a maximum amount of CHF 100,000. However, the deposit protection scheme does not guarantee payment of these deposits.
  • In the event of bankruptcy, any claims above CHF 100'000 would be assigned to the third class of creditors.
  • After completion of the bankruptcy proceedings, in case any of our customers still have claims against SGKB that had either not been covered or if they could no longer be satisfied due to lack of liquidity on the part of the bank, then these claims would be covered by the canton pursuant to the government guarantee.
  • For further information concerning the depositor protection system in Switzerland and references to the legal foundations see www.esisuisse.ch.