Sparkasse President Defends Hesitant Passing on of Interest Rate Increases to Savers

Sparkasse President Peter Schneider defended the hesitant passing on of interest rate increases to savers. Schneider said in Stuttgart that the European Central Bank’s (ECB) interest rate change last year was the right move to consistently combat inflation. Even if it took place at an unprecedented pace. “It is true that the savings banks have not increased deposit interest rates at the same pace.” This is a consequence of the business model. The vast majority of savers in the country were protected from negative interest rates because the savings banks granted very high allowances before negative interest rates became due.

At the same time, Schneider pointed out that the majority of the 169 billion euros in deposits are in loans for companies and private customers. The savings banks in Baden-Württemberg hardly invested any customer money with the ECB. In addition, the institutions have a lot of loans on their books from the long period of extremely low interest rates. Therefore, the savings banks have significantly less leeway when it comes to interest on deposits than banks that are hardly active in the credit market and only collect deposits from customers and then invest them with the ECB. “It is now easy for you to attract new customers with promises of high interest rates.”

A spokesman for the Baden-Württemberg consumer advice center said: “In the lending business, the banks have long since passed on the increase in interest rates, while in the deposit business they often fob off their customers with zero interest rates.” According to an evaluation by the comparison portal Verivox, customers at many savings banks and Volksbanks receive In the southwest, interest rates on current account accounts are still at best low – although the European Central Bank (ECB) ended the period of zero and negative interest rates in the euro area in the summer of 2022 and has since raised interest rates ten times in a row.

According to the evaluation, interest rates range from zero to a maximum of 1.5 percent for daily money with an investment amount of 10,000 euros. Commercial banks now receive 4.0 percent interest when they park money with the ECB. As a result, many financial institutions have increased the interest rates on daily and fixed-term deposits.

The President of the Baden-Württemberg Cooperative Association, Roman Glaser, said of the consumer advocates’ criticism: “The interest on deposits is also subject to market laws and is the responsibility of each individual bank.” The biggest enemy of saving is the current inflation. The DC, with its monetary policy, was too late in combating the looming inflation, which is now reducing the real interest rate on deposits.