ING Direct: Dutch Fund Covers €36,000, Contradicting Barclays Claim

Dutch fund covers €36,000 in ING, not €20,000

A Barclays branch salesperson warns a client that salary direct deposits at ING Direct are "not backed by the Bank of Spain." Spoken as a gesture of "security," this statement is technically true but practically incomplete. ING operates in Spain as a branch of a Dutch bank, placing its deposits under the umbrella of the Netherlands deposit guarantee scheme, not the Spanish one. The real question is: how much does that umbrella cover, and what does the salesperson omit?

The subsequent discussion on an investor forum dismantles this half-truth. According to calculations circulating in the thread, the Dutch fund guarantees 100% of the first €20,000 and 90% of the next €20,000, raising actual coverage to €36,000 per depositor. At that time, the Spanish scheme capped at €20,000. Thus, the Barclays warning did not protect the client; it pushed them toward lower coverage.

What exactly does the Dutch guarantee fund cover?

The calculation matters. With €20,000 deposited, coverage is 100%. With €21,000, the first tier is fully covered, but only 90% of the second, leaving €20,900 protected. With €40,000 or more, the ceiling is fixed at €36,000. This figure, repeated in several messages, corrects the idea that Dutch backing is inferior to Spanish.

The technical nuance omitted by the salesperson is that ING is not outside supervision. It operates as a branch of a Dutch entity, and the Bank of Spain retains legal authority to intervene. The difference is not in oversight, but in which treasury responds if the entity fails.

Competitors' argument: "Watch out for ING"

This scene repeats across various institutions. Employees at Ibercaja, Caja España, Banesto, Caja Madrid, and Santander allegedly warned clients that ING was "about to collapse" or that closing accounts would be an ordeal. At CAM, the comparison was made to canceling an internet contract. This tactic is not new: it is called antiestéticar-based acquisition.

Some argue these warnings stem from commercial pressure rather than financial analysis. ING itself pioneered the cash transfer order, making moving salaries and savings between banks cheaper. Competitors know this.

ING's solvency: losses, bailout, and repayment

Group data do not reflect an untouchable bank. Between January and September 2009, ING accumulated losses of €223 million, after earning €499 million in Q3 compared to losing €478 million in the same quarter of 2008. The hole came from Q1 and, especially, the insurance division.

The Dutch state injected capital by buying shares, not guaranteeing debt. This legal distinction separates the Dutch model from the Spanish one: in the Netherlands, the state becomes a shareholder with risk; in Spain, the state guarantees a semi-broken bank. Shareholders are paid last in liquidation, making the operation riskier for the treasury.

ING later repaid €10 billion to the Dutch state and announced the sale of its insurance business to strengthen solvency. Available data suggests the banking division held up better than the insurance arm.

The risk no fund covers: exiting the euro

The €36,000 coverage protects against bankruptcy. It does not protect against political decisions. If Spain left the euro, savings in a Dutch entity might convert to the new currency or remain in euros, and no guarantee fund resolves this uncertainty. The honest answer is that nobody knows until it happens.

The prevailing strategy is diversification: spreading money across multiple entities and countries. This reduces counterparty risk, not systemic risk. If the entire system wobbles, the umbrella of a national fund, whether Dutch or Spanish, becomes too small.

Is ING backed by the Bank of Spain?

No. ING Direct Spain is a branch of a Dutch group, and its deposits are covered by the Netherlands deposit guarantee scheme. The Bank of Spain retains supervisory and intervention powers but is not the depositor guarantor.

The practical consequence is that ING clients do not lose coverage compared to Spanish bank clients: they gain it, at least in the €20,000 to €36,000 range. The Barclays warning, presented as protection, is a half-truth hiding the important part. How many clients switched banks due to a notice that actually reduced their coverage?