FGC – Find out everything about the Credit Guarantee Fund

Understand how the FGC can protect some of your investments!

Anyone who starts researching investments will come across a widely used term, FGC (Credit Guarantee Fund).

It is because of the existence of the FGC that many investors feel safer about investing their money, as they know that they will not lose the amount invested, as long as, of course, everything is within certain conditions.

And if you want to know more about the subject, keep reading! We will explain how it all works.

What is FGC (Credit Guarantee Fund)?

The FGC was created in 1995 with the objective of protecting the capital and profitability of fixed income investors.

It is a private, non-profit institution that provides credit guarantees to clients of the institutions participating in the fund.

The fund is maintained by the country's financial institutions, which deposit 0.0125% of the total amounts transacted in financial products covered by the FGC every month.

Furthermore, the entity has professionals who work to prevent emergencies in the banking and financial system, to ensure that everything happens in the best possible way.

How does the FGC (Credit Guarantee Fund) work?

Protection occurs in cases of “extrajudicial intervention” and when the Central Bank recognizes the company’s state of insolvency.

If a bank goes bankrupt, customers who invested in its financial products will not lose all their money.

However, it is important to remember that the FGC covers up to R$250,000 per CPF/CNPJ in each financial institution.

This means that if an investor has R$ 300 thousand in an institution, the amount he will receive will be R$ 250 thousand.

In these 26 years, approximately 40 processes of intervention or extrajudicial liquidation in financial institutions were recorded, according to the FGC website.

People who had fixed income investments in any of these institutions and followed all the guarantee rules had their amounts returned.

Who are the parties involved in the FGC (Credit Guarantee Fund) process?

There are three parties involved in the process: liquidator, custodian and paying bank. Learn more about each of them:

• Liquidator: professional responsible for managing the institution to be liquidated.

• Custodian: financial institutions in which the financial assets are in custody.

• Paying bank: It is the bank to be defined in the liquidation process so that the FGC can make the guarantee payments to investors.

What is the FGC (Credit Guarantee Fund) payment process?

The value is calculated from the issuance rate of the financial asset until the date of the Central Bank's announcement regarding the bank's liquidation.

The liquidator, after calculating the amount corresponding to each consumer, will send a list with the names of the people who have amounts to receive.

After that, the FGC will choose a bank that will cover the losses and guarantees. There is a considerable interval between the bank's bankruptcy and the time for reimbursement.

Once the bank has been selected, the FGC will define a branch where the investor can withdraw the amount.

Upon receiving the amount at the stipulated location, you will need to sign a document proving receipt of the money.

What is the deadline for payment by the FGC (Credit Guarantee Fund)?

According to the entity itself, investors who invest in medium-sized banks need to wait around 30 to 45 days in the event of the institution's liquidation.

Furthermore, it is important to mention that each case will be assessed individually.

Considering all payments, the historical average interval between decree and payment was 90 days.

Which applications are covered by the FGC?

There are several investment applications covered by the FGC. However, not all of them meet the necessary requirements.

These are the investments that have an ordinary FGC guarantee:

- CDB (Bank Deposit Certificate)

• Real Estate Credit Letters (LCI)

• Agribusiness Letters of Credit (LCA)

• Bills of Exchange (LC)

• Mortgage (LH)

In addition to these types of investments, the FGC guarantees protection for the following types of credit:

• Deposits on demand or withdrawable upon prior notice

• Savings deposits

• In installments, with or without issuing RDB certificates (Bank Deposit Receipt)

• Deposits held in accounts not subject to checks intended for recording and controlling the flow of resources relating to the provision of services for the payment of salaries, wages, retirement benefits, pensions and similar services.

Why does Tesouro Direto not receive a guarantee from the FGC (Credit Guarantee Fund)?

Tesouro Direto is a fixed income investment. But why doesn't it have FGC protection?

The Credit Guarantee Fund ensures the capital invested in private companies. In the case of Treasury bonds, the issuer is the National Treasury, an agency of the Federal Government.

Therefore, there is no guarantee of protection for this type of investment.

However, even without protection, Tesouro Direto continues to be one of the safest investments in Brazil.

When you buy a bond issued by the National Treasury, you are actually financing a government debt.

The responsibility for payment lies with the government itself. And it is precisely for this reason that Tesouro Direto continues to be one of the safest investments.

For your income not to be paid through investments in Tesouro Direto, the entire banking system would have to go bankrupt, in addition to the government itself, which is practically impossible to happen.

Are investment funds covered by the FGC (Credit Guarantee Fund)?

There is no FGC coverage for investment funds.

The thing is, these investment funds are not, by regulation, a financial institution. In fact, they are managed by one.

This means that the assets of the funds are not confused with the assets of the financial institutions in question.

Conclusion

The FGC brings more security and peace of mind to those who want to invest their assets in some fixed income investments.

After all, for amounts up to R$250,000, your financial investments are guaranteed, even if the institution in question goes bankrupt.

However, this does not mean that investments that do not have this coverage do not have their advantages.

The ideal is obviously that you do a lot of research before investing in a new financial product, so that you can increase your earnings and minimize risks.