In accordance with a Directive passed by the European Parliament in 2014, all people legally residing in the European Union are entitled to open basic bank accounts. Below we discuss what a basic bank account is, what financial operations its holder can perform, and what requirements he or she has to meet in order to open such a bank account. We also point out why meeting these requirements is important.
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EU legislation on basic bank accounts
The EU conducted a survey in 2013 to find out how exactly Europeans were using financial services. The survey showed that about 58 million people above the age of 15 (and this was 12% of the total EU population) did not have bank accounts at all.
The survey also showed that it was hard for consumers to compare the offers and the prices of different banks. Even if comparison was possible, switching from one bank to another one was seen as difficult and potentially dangerous. Some EU residents also reported being unable to set up bank accounts in the EU countries other than the countries of their residence.
The EU authorities came to realize that some unified rules had to be introduced in the banking sector and the procedures of acquiring banking services needed to be simplified.
Since April 14, 2014, all Europeans can open basic bank accounts that they can use for their salaries, welfare, recurring payments, and debit cards.
The abovementioned Directive extends the rights and opportunities for those looking for regular financial services. Every legal resident of the EU including migrants and mobile citizens is entitled to open a basic bank account.
Basic bank account provisions in the EU
The Directives introduces changes in the following three main areas:
- It gives simple and free access to bank accounts for all Europeans even if they are non-residents of a particular EU country;
- It makes service fees and commissions charged by different banks in different countries comparable;
- It makes it possible to switch from one bank to another as well as to open a second bank account in another country.
Today, all EU countries follow the directive mentioned above.
Why banking services can be denied to you
We would like to stress that the Directive does not guarantee that any European can set up a bank account. You may not be eligible to open an account if you violate the AML/ CTF regulations, for example.
In addition, in some EU countries banking services may be denied to you if you already have an analogous bank account in the same country. If you want to open a basic bank account outside the country of your residence, you may have to prove that you really need one.
Proving it is possible, however. For instance if you work for a company that is registered and located in Slovenia but you live in Hungary, you will be able to set up a basic bank account in Slovenia in all likelihood. You need it because you work in Slovenia even though you don’t live in the country.
A bank account in Europe in 2024
Currently, all EU countries, including banks in the UK, follow the recommendations of the EU authorities. We are going to use the example of France to illustrate the opportunities that a basic bank account brings in the country.
A basic bank account allows using several banking services free of charge. The list of the services is determined by the national legislation.
If you live in France, the French bank where you are opening a basic bank account (no matter if it is a personal or a corporate account) has to provide the following 12 ‘basic banking services’ without charging you anything for them:
- Opening, maintaining, and closing the account;
- One change of residential address per year;
- Issuance of bank statements to the account holder;
- Direct debit bank transfers;
- Monthly reports on performed transactions;
- Cashing of checks and wire transfers;
- SEPA direct debit payments, SEPA interbank payment orders, or SEPA bank transfers (the latter can be made remotely);
- Online consultation;
- Cash deposit and withdrawal;
- A payment card that allows making payments everywhere in the European Union as well as online payments;
- Two bank checks per month of other equivalent payment methods;
- Cash transactions.
Basic services do not include checkbooks nor overdraft. This does not mean that you cannot obtain these services from the bank: you can but you will have to pay a fee.
We must admit, however, that the lists of ‘basic banking services’ differ from one EU country to another and even from one bank to another bank in the same country. People interpret the meaning of the phrase ‘basic services’ in different ways.
In some countries, the lists of basic services are almost identical. For instance, there are very much the same in Finland, Greece, Latvia, Luxembourg, the Netherlands, and Sweden. Other countries offer shorter lists of basic banking services in accordance with their national legislations. This holds for Belgium, Italy, and Poland in particular. A basic bank account opened in Italy will give you the smallest number of opportunities.
Nevertheless, thanks to the new rules, the portion of EU citizens who have bank accounts grew by 5.4% by 2017. Today, well over 90% of Europeans have at least one bank account. At the same time, the statistics are not the same in all EU countries. In Romania, only 58% of residents have bank accounts. In Denmark, Finland, the Netherlands, and Sweden the figure is 100%.
How to open a bank account in Europe
Everybody who legally resides in one of the EU countries is entitled to open a (basic bank account). You don’t have to be a resident of the EU country where you want to open a bank account: the bank administration has no legal right to deny services to you.
Please mind, however, that this rule does not cover other types of bank accounts such as savings accounts, for example.
A basic bank account serves only the basic purposes such as:
- Making deposits;
- Withdrawing cash; and
- Making and accepting money transfers.
A basic bank account also allows obtaining a debit card that you can use for cashless payments including online payments. If possible, the bank also provides online banking services. Most banks in Europe now have online applications so this is usually not a problem.
