The big banks save term deposits: why don't they pay for your savings?

Anyone looking for a term deposit to make their savings profitable will not fall in love with what the big banks offer. He will have to negotiate for a bespoke suit or go for an alternative, because they don’t have deposits in their standard business offering and often redirect that interest to other options.

According to data from the ECB, the average return on deposits in Spain is 1.3% for one year or less. Figures below inflation and that are achieved outside of large entities. Banking sources point out that it loses out compared to the euro area (2.3% in the same term) because in other countries it is mandatory to remunerate more, the variation in rates moves faster – in the past with rates at zero and negative they came to collect from individuals – and they seek to attract savings that go to other assets. In any case, the main factor is that Spanish entities have good liquidity, which does not make it necessary to capture savings through deposits. “The ECB’s support policies and the accumulated savings of families leave them with excess liquidity,” these sources point out.

“The rise in rates is transferred to other products, but not to deposits,” says Antonio Luis Gallardo, head of studies at Asufin. According to a review by the association, those that pay the most today are lesser-known banks. Wizink, Banco Finantia or EBN are above 3% APR on 12 or 18 month deposits. “The saver in general is conservative and is not going to move the money to a bank that he does not know. He outweighs risk aversion than what they are offering.”

Among large entities these figures are far away. CaixaBank, BBVA, Sabadell, Santander or Unicaja refer to other products when asked for deposits that are actively offered today in their commercial strategy. At Bankinter, the most similar thing is a deposit in dollars at 4% APR for one year, but it is not recommended for everyone nor is it sold proactively, since it has an exchange rate risk. Offers are given in subsidiaries. As in OpenBank (from Santander), which offers a 2.75% APR for one year, a figure that is accessed with income of at least 600 euros per month.

That they are not in the office windows does not mean that they do not exist. Unicaja sources point out that “there are deposits both for clients who come from abroad and for those who are already in the entity. It is a product, however, that depends on the profile of each client”. The sources consulted explain that it occurs with more linked clients or private banks, with greater wealth. Behind closed doors, negotiating, “there may be cases that a specific type is contracted with a client, but in the current commercial offer, the standard, it is not a product that is available,” says another entity.

For many, the deposit is the preferred option for their security. Ramón Bermejo, professor of financial management at Comillas Icade, recalls that “the risk is not zero”. There is counterparty risk, that when looking for more profitability we end up in a not so solvent entity and that it goes bankrupt. That is where the deposit guarantee funds will come into play, he explains, which in Spain protects 100,000 euros per depositor and entity. “We should look for entities that are as large as possible to avoid risk,” says Bermejo. And distribute the savings so that you do not have more than 100,000 euros in a single entity.

Without deposits, what safe product do the big banks offer for savings? CaixaBank has a remunerated account of 5% APR for the first 5,000 euros of balance for two years, with a new salary of at least 2,500 euros. Sabadell in its online account offers 2.5% up to 30,000 euros the first year. Bankinter remunerates 5% the first year in its payroll account and 2% the second, up to 10,000 euros. The digital account, 1%. At Unicaja you get 2.01% in the remunerated online account and 4% in the payroll, up to 5,000 euros for two years. With payments based on balance, in general you have to check the fine print for maximum balances or requirements, because they are not deposits as such. The saver is also recommended from funds to savings insurance. But the former lead to more risk and commissions and the latter may have exit costs. Life annuities are also gaining ground.

Thus, the deposits remain in the drawer and there are no war grounds for liabilities. “Banks either don’t have them or hide them. The alternatives cover another type of savings,” summarized in Asufin.