The deposit returns have improved after the sharp rise in interest rates by the European Central Bank (ECB), but very unevenly between the countries of the euro zone. Spain is in the tail van with average wages below 1%. A) Yes, in the eurozone, an average of 73% more is paid for the savings than in the Spanish geography. Although offers stand out, the majority of entities that operate on Spanish soil have not aggressively launched into liabilities and the big banks are still on the sidelines.
Specifically, the average interest on fixed-term deposits of up to two years is 0.69% in Spain compared to 1.20% in the euro region, according to the latest data available from Eurostat corresponding to last November. The difference is even greater (86%) in longer periods, with 0.97% versus 1.81%.
Italy and the Netherlands are the countries where bank deposits yield the most up to 24 months, above 1.8% on average. They are followed by Estonia and Finland, with yields of 1.73% and 1.63%, respectively. At the other extreme is Cyprus, where interest is barely 0.11%. Greece gives 0.20% and Portugal, 0.35%. Four other countries, in addition to Spain, yield less than 1%.
In terms of more than two years, Estonia occupies the first position with almost 3% (2.94%). Luxembourg, Lithuania, Italy, France and Austria also offer more than 2%. Spain is the third member of the euro zone that pays the least, only behind Ireland (0.7%) and Portugal (0.14%).
The most attractive offers on Spanish soil are around 2.50% APR and are from neobanks
In Spain, it is the online and newly minted banks that have battled for deposits in recent months, due to the rise in official interest rates, after many years of remuneration at record lows. Thus, interest rates have been gradually rising and the most profitable offers are around or even exceed 2.5% APR. Renault Bank raised its fixed term to 24 months to 2.83% APR a few days ago. Wizink markets 2.50% APR at 36 months and 2.30% at 25 months, EBN offers 2.40% APR at 36 months. BFF Bank even pays 2.27% APR on its deposits for six months and one year.
However, large entities are reluctant to enter the fray. The sector considers that it has a great solvency position due to the abundant liquidity and, although it is likely that in the future they will have to repay savers’ money more because interest rates will continue to rise, he does not foresee high returns. Banking sources predict that the average rates could exceed 1% or reach 2% “at most”.
The CEO of Bankinter, María Dolores Dancausa, is disappointed to see a “generalized” rise in deposits in the short term. From Asufin they see a war on liabilities as “very unlikely” and note that banks are more inclined to capture new payrolls. The consumer association maintains that the deposit market is still not experiencing movements because banks have no incentives to do so, since they continue to widen their profit margin on the financing side, where the increase in rates has been rapidly transferred.
Sector and experts rule out a liability war due to the liquidity still available
The same sources comment that the lower remunerations compared to the rest of Europe are also due “to the still higher costs of the branch network, the bank tax in Spain and the lower difference in liquidity between liabilities and assets”. Víctor Alvargonzález, founding partner of Nextep Finance, believes that “the largest banks will hold out as long as they can before entering into this type of competition, and they will gradually raise the remuneration of deposits and establish conditions to encourage cross-selling of their own financial products.
The foreign bank deposits that can be contracted through the Raisin platform are more generous. Remunerations have always been one step ahead and reach 3.35% APR in a French bank, 3.19% APR in a Lithuanian one or 3.05% APR in an Italian one. For her part, the person in charge of the fintech In Spain, Mónica Pina believes that “the ECB has revived competition for savings and almost no bank will be able to ignore it in the long term”. Thus, she believes that “savers can continue to wait for increases in interest rates and a greater number of offers.”
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