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German lenders offer low rates to savers.

 

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Ger­man banks are reap­ing a wind­fall amount­ing to tens of bil­lions of euros by not passing on higher interest rates to their cli­ents, accord­ing to the head of the con­tin­ent’s largest retail deposit broker, Raisin.

Euro­zone lenders can now earn 2.5 per cent by depos­it­ing liquid­ity overnight at the European Cent­ral Bank, but Ger­man retail banks, on aver­age, pay only 0.07 per cent in interest to retail depos­it­ors, accord­ing to Raisin data.

Lenders in Ger­many, where mort­gage rates have almost quad­rupled in a year, will earn a wind­fall profit of about €40bn this year, accord­ing to Raisin cal­cu­la­tions.

«This is unfair from a con­sumer’s point of view,» Tamaz Geor­gadze, Raisin founder and chief exec­ut­ive, told the Fin­an­cial Times. Some Italian banks, for example, are pay­ing up to 1.5 per cent interest on overnight depos­its to retail savers.

Ger­man banks have in the past been more gen­er­ous to savers. Dur­ing the pre­vi­ous two peri­ods of rising interest rates, in 2008 and 2011, 30-40 per cent of the increases were passed on to retail cus­tom­ers, the Raisin data shows.

Raisin over­sees sav­ings assets of more than €30bn, up 20 per cent since mid2022. He warned that this situ­ation could, in time, trig­ger a reg­u­lat­ory back­lash.

«This is a polit­ical and a soci­etal issue,» Geor­gadze said, adding that large parts of the pop­u­la­tion were affected. «In Ger­many alone, some 80 per cent of cit­izens who have money on cur­rent accounts and overnight accounts are affected.» He said many held large parts of their wealth this way.

Banks needed to brace them­selves for polit­ical inter­ven­tion should they not become more gen­er­ous on their own, he said.

«In Ger­many, there are laws that pre­vent extor­tion­ate interest on credit but no rules for min­imum ones».

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  1. Anton7 March 2023 at 16:00

    Unfortunately there seems to be the need for political intervention in this case. Banks are not going to reduce their profits otherwise. In these particular and peculiar times banks must be generous or they should pay for being greedy.

    ReplyDelete

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