Spanish households had up to March 982.8 billion euros saved in deposits, an amount less than the trillion they reached for the first time last December. From then on there was a flight of deposits -of around 21,500 million-, coinciding with the financial turmoil caused by the collapse of Credit Suisse, but also with the refusal of the large banks to improve the remuneration of deposits despite the strong rate hike by the European Central Bank (ECB), from 0% to 3.75% in less than a year. A context in which many savers, in order to cushion the blow of inflation, diverted money from their deposits towards conservative investment products, fostering the boom in Treasury bills. But, is it still worth investing in this product?
“The great alternative to deposits are Treasury bills, with a return of more than 3%,” VÃctor Alvargonzález, independent financial adviser and founder of Nextep Finance, is convinced. If you are willing to invest in longer terms, you can opt for bonds with a maturity of two or three years, with a yield of approximately 3.15%. Another alternative is to bet on a monetary fund, which “leaves greater profitability if it is chosen well.”
Can a deposit pay a similar interest rate? Yes, although you have to resort to foreign, smaller banks or entities that operate online, as warned by the Association of Financial Users (Asufin), which has recently prepared a ranking with the best-paid bank deposits, which belong to Wizink, EBN Banco, Banco Finantia, Pibank, Banca March and Renault Bank, as shown in the following tables.
The best offer in deposits “does not include any product from the large entities with the largest market share,” they comment from Asufin, with the exception of Bankinter and Banco Sabadell. In the first case, a paid account is offered with up to 5% profitability only for the first year, and in the second, 2.5%, but only for new clients. The large banks’ lack of appetite to compete in this segment “is being taken advantage of by other types of entities, especially financial ones, to attract customers,” explains the president of the association, Patricia Suárez.
The sources consulted attribute the lack of interest shown by large entities in the deposit market to the great liquidity that the sector has accumulated in recent years and to the fact that, as Alvargonzález points out, “they have found a formula to place money of their clients in products that entities find more beneficial than deposits: fixed-income investment funds -which they call target return-“. Banks buy bonds -for example, from the Spanish or Italian state-, “package them into funds and sell them with a management fee of around 0.50% or 0.60% per year.” In return, the client achieves a return of slightly more than 2.50%. On the other hand, commission is not usually charged for deposits.
Another advantage for the bank is that “they retain customer loyalty for much longer with these products than with a deposit”, although “it would be much more profitable for the customer to buy the Treasury bonds or bills themselves”, since they can be acquired through from the entity itself or from the Bank of Spain with a lower commission than the one charged by the investment fund.
Another reason why the big banks are not remunerating their deposits better is “that having to pay more for them would narrow their margins, and they don’t need it right now nor do they want it because of the capital ratios, which are quite demanding “, says Juan Carlos Huertas. The doctor in Economics and professor at EAE Business School anticipates that “after the summer” the big banks will begin to remunerate this type of savings product better if the flight of deposits in traditional banks continues, an amount “that is still insignificant”. . However, “once the first entity moves, the others will,” he asserts.
For his part, Santiago Carbó, director of Financial Studies at Funcas, argues that there are several technical factors that can explain the delay in transferring official interest rates to deposit remuneration rates. One of them, “the greater sensitivity of Spanish banks to market conditions that has led to a massive transfer of savings accounts to sight accounts in recent years”, in which the client has the right to reimbursement immediately without any penalty, or margin sensitivity after six years of seeing their profits eroded by the zero interest rate policy.
Despite this, the expert expects that Spanish banks will end up increasing the remuneration of their deposits, as has happened in other European markets. “It is logical, especially since monetary policy decisions -and in this case the rise in interest rates- must also be fully transferred to savings. In addition, it will be convenient to do so to reinforce customer loyalty, promote savings and offer a solid basis for contractual relationships in an increasingly competitive financial environment”, says Carbó.
For the president of Asufin, the fact that Spain is at the bottom in this regard compared to neighboring countries -France remunerates deposits at 2.87% on average; Italy, at 2.82%, and Belgium, at 2.48%, while Spain does so at 1.36% – is a consequence of the numerous bank mergers that have taken place in recent years and have caused a concentration in a few hands of this business. And she concludes: “For competition to be real, there would have to be a single European market in this sector.”
