Febelfin rejects a mandatory increase in savings interest. The banking federation is also reluctant to respond to the letter from Minister Vincent Van Peteghem (CD&V) that interest rates must be raised.
Febelfin, the federation of the banks, reacts negatively to the warning from Minister of Finance Vincent Van Peteghem that interest rates on savings must be raised. There has been dissatisfaction for some time about the low interest rates applied by Belgian banks to savings accounts, while the interest rate of the European Central Bank (ECB) has risen to 3.25 percent.
Vooruit proposed that the government impose an increase in the minimum interest rate on savings accounts, but such an intervention could thoroughly affect the stability of the banking sector, says Febelfin in a press release. ‘Each bank has a different business model and must make its own risk analysis and estimate what savings interest it can offer.’
In The seventh day State Secretary for the Budget Alexia Bertrand (Open VLD) said that she supports Van Peteghem’s letter. But she considers an obligation to raise the minimum interest rate on savings accounts, as Vooruit proposed, as the ‘ultimate weapon’. “I prefer the free market and competition to play.”
Febelfin argues that the interest on savings is not solely determined by the deposit rate of the ECB. ‘For example, between June 2014 and July 2022, the banks were confronted with a negative deposit rate at the ECB, where they had to pay to place their deposits, while in Belgium the minimum interest rate of 0.11 percent continued to apply. Belgian savers have therefore never had zero interest or negative interest on regulated savings accounts, unlike many other European savers.’ In some European countries, the interest on savings is higher than in the Netherlands.
Véronique Goossens, chief economist at Belfius, referred The seventh day also to home loans, which have been granted at low interest rates in recent years and run for the long term. ‘Most of the savings are transformed into loans’, she argues, and not deposited with the ECB. ‘The new loans have a higher interest rate, but the turnaround is slow, especially now that the demand for loans has fallen.’
“Belgium is one of the few countries in Europe where so many loans with fixed interest rates – almost systematically over the last 13 years, more than 70 percent of total production – are granted for such a long term,” writes Febelfin, which also points out that there are there is much more money in savings accounts than home loans have been granted. ‘In concrete terms: there are approximately 300 billion regulated deposits, each increase in the interest rate by 10 basis points (minimum interest rate from 0.11 to 0.21 percent) on savings deposits costs the sector almost 300 million euros. An increase of 100 basis points (or +1 percentage point) on savings deposits will cost the sector 3 billion euros.’
Finally, Febelfin points to the banking taxes in Belgium and the deposit guarantee, which, according to the federation, are particularly high and flow to the government. The government is skimming money from savers in such a way that the banks can no longer pay them out, writes Febelfin. The federation calls on the government to ‘reflect thoroughly on the impact of any legal initiatives on the Belgian banking sector, and by extension the entire Belgian economy’.
2023-05-21 16:30:36
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