As the interest rates on locked deposits plateau, banks seem to be sending a clear signal to savers.
The era of rising rates on fixed-term deposits is coming to an end.
Meanwhile, financial institutions eagerly anticipate the European Central Bank’s upcoming rate cuts.
Through unfavorable terms on locked deposits, banks appear to be telling clients to “take your money and leave.” Not only do they not feel the pressure to compete for new savers, but they are also driving away existing ones.
Why? Banks currently boast substantial liquidity reserves, with loan amounts on their books far below deposit levels.
Their intention is to shield savers as much as possible from the impact of the ECB’s high-interest rates, aiming to maintain wide interest margins and boost profitability.
In Italy, the average deposit rate stood at 1.0% in January, a 4 basis points increase from the fourth quarter of 2023.
Despite this, banks have shown resistance to raising interest rates for depositors, waiting for the ECB to kick off rate reduction this summer, while capitalizing on the current situation.
Currently, opportunities for savers with relatively modest sums to earn a 2% return or higher over a year are scarce in the banking market.
They are unlikely to find similar opportunities at major banks with hefty liquidity reserves and will need to turn to commercial banks and smaller institutions.
Depending on each bank’s policy, to receive even a slightly higher interest rate, the saver’s deposit balance must exceed a certain threshold – not low at all.
In some major banks, a marginal interest rate is only granted on balances over €60,000.
For lower amounts, the return is often zero.
Additionally, many banks currently impose monthly account maintenance fees.
This setup results in a negative return, as depositors end up paying the bank to hold tens of thousands of euros – an absurdity.
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