Trade Republic Response

[scareddofthedecline]

Hello,

Thanks for contacting us about the ways your money is protected.

As an investment firm, we’re not in the deposit-taking business. Instead, we hold your funds in a collective trust account at one of our partner banks: Solaris SE, Citibank Europe plc, Deutsche Bank AG or J.P. Morgan SE. Each partner bank offers deposit protection:

Deposits at Solaris SE, Deutsche Bank AG and J.P. Morgan SE are protected by the German Deposit Guarantee Scheme.
Deposits at Citibank Europe plc are protected by the Irish Deposit Guarantee Scheme.

We have an automated process in place to decide which banking partner stores each customer’s funds. Please keep in mind that, because this is an automated process, it’s not possible to manually switch partner banks.

Regardless of which partner bank holds your funds, here are a few ways your money is protected:

Both Deposit Guarantee Schemes (DGS) protect up to 100.000 EUR per investor, per bank.
Because your money is held in escrow accounts, it's kept separate from Trade Republic's assets.
We only use the funds within the framework of our Customer Agreement with you, namely for providing financial services.

In addition, Trade Republic is a member of the Compensatory Fund of Securities Trading Companies (EdW). This means that, not only are deposits guaranteed, we’re also legally required to protect any liabilities arising from securities transactions. For further information, read about Security and Protection on our website.

You can always find your cash account information, including which partner bank holds your funds, in the app: go to your Profile > Settings > Accounts & securities > Cash account.

If you still have questions, please don’t hesitate to contact me or feel free to take a look around our Help Center.

Have a nice day!

Best regards

 

[resjudicata]

@scareddofthedecline Yeah but if all funds are held together in one account, that means the account is well over 100k. So if the partner bank goes under then who will get their money back

 

[scareddofthedecline]

@resjudicata

Both Deposit Guarantee Schemes (DGS) protect up to 100.000 EUR per investor, per bank. Because your money is held in escrow accounts, it's kept separate from Trade Republic's assets. We only use the funds within the framework of our Customer Agreement with you, namely for providing financial services

Does this not squash this? Per investor, per bank would suggest to me that they're referring to our individual accounts and not their own account with the bank, which would all be covered.

 

[roman959]

@scareddofthedecline This is what they are saying. But it doesn’t quite line-up with typical rules for deposit guarantee schemes. Typically to be protected, an individual needs to be a direct customer of a licenced bank and have an account under their own name (there are other ways to be covered, such as when a solicitor is temporarily holding funds on behalf of a client, but I don’t quite see how any of them would apply here).

Also their reference to “escrow accounts” is bringing more confusion to me. It blurs the line even more in terms of who has legal ownership of the funds while they are in escrow (is it the depositor, Trade Republic, or the escrow agent?).

 

[roman959]

@resjudicata Yes I also find their answer unconvincing.

Also they are referring to escrow accounts which would be worthy of more explanations. If those are truly escrow accounts, neither TR not the depositors are the legal owners of the funds anymore: the escrow agent is (they have a duty to release the funds when instructed to do so by TR and the depositor, but they are the legal owner). IMO this adds yet another level of complexity in terms of deposit protection.

 

[sjp51]

@resjudicata This is my fear, the funds of all users mixed together in the same bank account under only one name. It would be likely that only 100k would be covered even though such an account would have much more than that.

The bank itself might not even know from whom the funds are. It might be only Trade Republic keeping track of that.

Any clarification from TR on the "COLLECTIVE escrow account" yet?

 

[melodyjane]

@scareddofthedecline “ Thank you for contacting me!

You can download the Deposit Guarantee, in which is listed your personal escrow partner. Go to the circle at the top left -> Personal Info, open it, then scroll down to Service -> Documents and then you will find "Deposit Guarantee" under General Documents.

The investor of course is the customer, you in this case.”

TR clarification for similar question

 

[meansofgrace]

@scareddofthedecline City bank europe (TR Account holder) says :

However, some deposits are excluded from protection. A deposit is excluded from protection if It is a deposit made by a depositor which is one of the following:
...
- Investment firm (as defined in the Statutory
Instrument No 60 of 2007)
...

Sounds bad imo.

 

[sebastianw]

@scareddofthedecline This is all very interesting... and worrying at the same time.

I also don't trust "collective escrow accounts" with regard to deposit guarantee schemes (They keep mentioning the "collective" part btw...). However, TR has recently received a full banking license in Germany. They are - theoretically - not just "finance agents" or whatever anymore. And we're talking really recently, December 10th 2023 if I'm not mistaken. Could this possibly change the nature of the account? Could they possibly start holding the accounts themselves, or better, have them truly be in each individual client's name?

I guess we'll have to wait and see. Until then, I don't trust them enough to deposit my savings for the 4% interest. Bank or not, German banks have not been doing great lately anyway... Scary stuff for small-time investors / depositorts like myself.