Trade Republic paying 4% on deposits up to €50,000

My passport is out of date and they do not accept a drivers license, has any one tried to register with the public services card?
 
I've read through this thread and I'm still none the wiser if uninvested cash is covered by the Deposit Guarantee Scheme (€100,000) or the Investor Compensation Scheme (90% of your net loss, up to a maximum of €20,000), or neither of these at all.

 

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traderepublic.com
Are you a bank?

Trade Republic is not a bank and does not conduct deposit taking. We are a German securities trading platform and investment firm
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The Deposit Guarantee Scheme (DGS) protects you if you have money in a bank, building society or credit union.

Are you a bank?

Trade Republic is not a bank
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That doesn't give me peace of mind.

How is my money protected?

All funds in the cash account are legally protected up to €100,000 per investor.
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But who is the investor in this case? We deposit our money to Trade Republic's bank account, Trade Republic then move the money into an escrow bank account, doesn't that now pass the baton and technically make Trade Republic the investor.
 
I'm confident that the underlying bank accounts are protected from bank failure.

I'm reasonably confident that these would be seen as beneficiary accounts (just as for a solicitor or investment advisor), so that the deposit protection is per investor.

I'm not at all clear what happens in the unlikely event that Trade Republic were to fail - how isolated from Trade Republic's other liabilities are the investor funds in bank accounts ? In this situation the bank guarantee is not even invoked, as the bank has not failed.
 
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I've been following this thread for a few days, and decided to reach out to Trade Republic.


Over the course of a few emails, I was informed that


I followed up with
if I open an account, and should anything happen, I am going to be paid out my cash up to €100,000 from the deposit guarantee scheme?
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And recieved a reply that
In case of an insolvency from Trade Republic you are protected up to 100.000 EUR. Regardless of which partner bank holds your funds.
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I went ahead and opened an account, which raised more questions for me. My next follow up email was:
To which they replied:



I was initially concered about the note in the deposit guarantee scheme document, since I was a "beneficiary" and the DGS covers depositors (Trade Republic in this case).

But, from what I was told in these emails, the funds are covered in the case of insolvency of both Trade Republic or their partner bank (Citibank Europe plc in my case), and the DGS extends to me.

The only "catch" is that if I already had savings of say 80k with Citybank, and had another 50k with Trade Republic, and Citybank went out of business, I'd only be covered to a total of 100k between the two.


Please let me know if I'm missing anything.
 
Because your money is held in escrow accounts, it's kept separate from Trade Republic's assets.
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To @MugsGame point above, in the event of Trade Republic going bust, would you not be 100% protected i.e. what call to TR have on the funds if they are in escrow? Is it not the case that if Citibank go bust, its that the DGS kicks in?
 
I fail to see how the DGS kicks in if Trade Republic goes under. As mentioned by MugsGame, the funds should be secure and seperated from the rest of the company so should be safe (heard this before?) but I think it is misleading for them to suggest that depositors have a call on the Deposit Guarantee Scheme if trade republic themselves go under.
 
matelk said:
I've been following this thread for a few days, and decided to reach out to Trade Republic.

Please let me know if I'm missing anything.
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Are you sure you can really trust their response though? Seems like walking into a barbers and asking if you need a haircut. Possibly would have been better to reach out to depositguarantee.ie instead?
 
*should* being the operative word.

If TR were to provide demonstratable proof my funds are held in escrow, that they are uniquely identifiable and traceable to me, and provide a clear, and verifiable, explanation of how I would gain access to my money should they go bust, I would reconsider my position on them.

Even if all of the above could be satisfied, I'd still need to make a judgement call as to how long would I be happy waiting for my cash while the above was being sorted out.
 
Presumably the only way they could do this would be if they literally open a new bank account for each new investor? That way, if they go bust, then each customer still has their own personal IBAN with a European bank. But I assume they just group everyone's money together in just a couple of large accounts (they say they have an escrow account in Germany and Citi in Ireland).
 
According to this Austrian chap you have a "virtual IBAN" per customer. That's the IBAN you use to transfer funds TO Trade Republic. When you request a transfer from TR to your reference/current account, the source IBAN will be the escrow (pooled) account. So the bank knows how much you paid in through this virtual IBAN it seems. You can transfer funds to your TR virtual IBAN from an account that is not your reference account but you must be the account holder (I believe this is purely a money laundering prevention mechanism and they do not use your name to track who the funds belong to, that is all done using the virtual IBAN).

https://www.youtube.com/watch?v=j85BKFKaNA4&ab_channel=Broker-Test.at (sorry the video is entirely in German but there's a lot more information available about TR in German for obvious reasons)

He points out that it can take several days to transfer money in and out and this has been my experience also.
 
Maybe it's getting better. I transferred a few hundred to my TR account yesterday and they just pinged me to say it has arrived, so less than 24 hours to pay into the account. I think paying out of it still may take longer but I only tested that once with a single Euro to make sure the "path" worked, both in and out, before I sent real money over it.

Anyway I cannot find anything close to 2% here in Germany for demand deposits. Plenty of limited time offers around but only valid for new business for 3 or 4 months. I don't want to keep chopping and changing bank for 1% over what my own bank pays. I will use this account to keep any rainy day money I have up to a certain threshold (after which it will be invested in ETFs). My virtual IBAN is from J.P. Morgan in Frankfurt by the way. TR uses them, Deutsche Bank and Citibank Ireland (hence the Irish deposit guarantee scheme should Citi fold its Irish operations would come into play) at the moment. It looks like they may no longer be using Solaris bank which was their original banker I believe. Solaris itself, although a regulated bank in Germany, is a young company and I have to say I would have been a bit more uneasy about my money being with a startup bank, given the recent history of the German regulator being asleep at the wheel.

The only bad things about TR from my perspective is that they do not offer joint accounts, they do not accept power of attorneys (so if I die my wife would have to wait until she got a grant of probate to access the funds, of course in reality she has my passwords and I have told her to just move the money out to our current account immediately should I croak it), they don't allow multiple deposit accounts and they don't allow minors to open accounts or have accounts opened in their name. These are all things my old broker (Comdirect) did allow, but Comdirect charged a lot more for transactions and their deposit account only pays 0.4% so I put up with the disadvantages of TR because the overall offering is far better. My own bank is at least increasing its deposit rates to 1% from April but why leave it there when I can get double that from TR.

The finance youtubers here in Germany are all of the opinion that this money is coming straight out of the TR marketing budget. There is no way for them to offer 2% without losing real money. They reserve the right of course to stop paying interest at any time. They spend their marketing budget on it in the hope that you will invest the money rather than leave it there earning a "measly 2%". I bet it works with a lot of people too. If you have self discipline though it's a handy place to park money.
 
murphaph1 said:
The finance youtubers here in Germany are all of the opinion that this money is coming straight out of the TR marketing budget.
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There's no reason it would be any longer. The current overnight interbank rate (€STR) is 2.4%.
 
RedOnion said:
There's no reason it would be any longer. The current overnight interbank rate (€STR) is 2.4%.
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Interesting. Nevertheless the 2% still hammers the next bank down here in Germany (I think about 1.25% from Ford Bank) when you exclude time-limited offers so I don't expect TR to have to increase that 2% anytime soon but if regular banks do creep up to 2% territory then one would expect that marketing budget to be dipped into again...hopefully! For me it's an opportune time to have somewhere to park several k but it's because we are refinancing our home loan at the moment and once that is through I will be moving a good chunk of it out of TR to pay down the new mortgage which is 3.8% APR. I always keep a bit of rainy day money of course and that can stay with TR. If TR loses the 2% advantage to my own bank I will just repatriate the money to my own bank I suppose. I don't care to open and close deposit accounts every 3 months to avail of the latest offer that gains me 1%. I am far too lazy for that.
 
But TR not being a bank, do they profit from the 2.4% on customer deposits?
 
Lisboa said:
But TR not being a bank, do they profit from the 2.4% on customer deposits?
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They could easily have an agreement with the bank they place funds with that they are receiving 2%, or €STR less a margin, etc etc.
They're a massive organisation, their options aren't the same as yours and mine.
 
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