Small banks advance large entities in payment for deposits

Households tend to entrust their savings to banks even when they do not earn a return. Deposits continue to be the main reserve of families' financial wealth compared to products such as investment funds or the purchase of shares or bonds. Proof of this is that throughout this course the reserve in deposits in banks has accelerated, 40,000 million more than at the end of 2021. Now, in the sector there is beginning to be more and more talk of the war for deposits, although in the first battles it is the small banks and the fintech that have taken the initiative, while the large entities remain waiting.

The field of dispute is as follows. For years, interest rates have been at 0% or even negative. Banks stopped paying their customers for keeping their money in deposit accounts, and even large companies and institutions were charged. The ECB stopped encouraging banks to set aside money in central bank accounts - in a process known as "deposit facilities" - to boost funding to the economy. With inflation skyrocketing, the ECB has ended a decade without raising interest rates and has already raised them twice, first by 0.5 points and later by 0.75 points.

In this way, banks obtain returns for keeping reserves in the accounts of central banks thanks to the rise in rates. It is a monetary strategy that seeks to have less money in the economy to try to contain prices. That is, they have a 'mattress' that pays them, at a time when the prices of loans and the returns they get for them are increasing. It is one of the reasons on which the Government bases the implementation of an extraordinary tax on banks.

However, despite the benefit they get from leaving money with central banks, they do not pass it on to customers who in turn leave money on their balance sheets. In the sector it is assumed that they will have to end up paying for these deposits, but different entities consulted suggest that it will still take time to see these movements by the large banks.

It is, however, the small entities and online banks that have begun to shake the tree of interest-bearing accounts. It is a continuous trickle since the beginning of the summer of offers to attract customers who are looking for, without assuming financial risks, a return for their money, even if it is at a level below inflation. There are even financial companies that are not strictly banks that have joined this incipient war. This is the case of Orange Bank or Renault Bank. The 'teleco' and the car company have announced in recent months an escalation in the yields they pay their clients for saving their money.

Banks with a smaller customer base or even foreign groups are seeking to gain a foothold in the market by paying for deposits. EBN Banco has been the last, this week, to announce a rise in interest with which it will remunerate its clients for their 12-month deposits. Pibank has been, for its part, one of the foreign banks that has tried to gain a foothold in this business with offers, as it did with the mortgage price war. The Italian Mediolanum has also launched an aggressive campaign to capture high-interest deposits. In addition, digital platforms such as Raisin are proliferating, allowing access to interest-bearing deposit accounts from other banks located in different EU countries. It is advisable, yes, to analyze the offers of all these entities because sometimes they can come with commissions or the need for a link, as well as a minimum amount.

Despite all these announcements, the statistics show that the remuneration of deposit accounts in Spain remains at very low levels. The Bank of Spain prepares a monthly analysis of the interest rates at which new deposit operations are signed. In July, the latest data available, the average of new operations was 0.09%, a really low figure when compared to the same moment a decade ago, when the average was almost 3%. Although, it shows an incipient upward trend with respect to the data from the beginning of the year. It becomes more noticeable in deposit operations that exceed one year. In the case of company deposits, at the beginning of the summer they went from charging for them to remunerating them, according to data from the Bank of Spain.

The big banks, in general, still stick to the policy they have practiced to date. Only Sabadell and Bankinter, among the main entities in the country, have made incipient movements in this way. The rest do not yet offer remunerated accounts as they did in the past and they will still take a while. Industry sources consulted by this means point out that there is a "lag" from when interest rates are raised until they are effectively applied to customers. In addition, they understand that small entities, having a smaller customer base, can afford to pay more for savings, while the structure of a large bank still needs time.

There are managers who have already openly stated that they are going to wait longer before paying again. Both Santander and CaixaBank have positioned themselves in this way. The CEO of the latter, Gonzalo Gortázar, assured in July, during the presentation of results, that he recognized that the bank does not have on the table at the moment to return to pay for deposits. "Our strategy will continue not by remunerating deposits but by helping our clients obtain better returns by assuming a certain risk that they can assume based on their objectives and, above all, their investment horizon. ", He pointed out after the first rate hike and before the magnitude of the second, the highest in history, was known. "If you don't need it in six months and what you want is to save for your retirement, you have many ways to invest your money through insurance solutions, annuities, funds that are much better than looking for the bank to pay you the 0.25 or 0.50, which does not make financial sense in environments of high inflation," explained Gortázar.

Banks have continued this year to capture customer savings for the investment funds they manage, one of the most important sources of fee income in recent years. However, the poor evolution of the markets is causing a difficult year for these vehicles, which until August have reaped a return of almost -7%. The assets of investment funds recorded a fall of 5,400 million euros last month, bringing the total to 302,321 million euros. In the year as a whole, assets have fallen by more than 15,220 million, according to data from the employers' association Inverco.

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