the deposit returns have improved following the sharp rise in interest rates by the European Central Bank (ECB). very uneven between the countries of the euro zone. With average wages below 1%, Spain is on the last track. A) Yes, in the eurozone, on average, 73% more is paid for savings than in Spanish geography. Although the offerings stand out, most companies operating on Spanish soil have not borrowed aggressively and the big banks are still on the sidelines.
Specifically, the average interest rate for fixed-term deposits with a maturity of up to two years in Spain is 0.69% compared to 1.20% in the euro zone, according to the latest available Eurostat data from November last year. For longer timeframes, the difference is even larger (86%) at 0.97% versus 1.81%.
Italy and the Netherlands are the countries where bank deposits with a maturity of up to 24 months yield the highest returns, averaging over 1.8%. Estonia and Finland follow with returns of 1.73% and 1.63% respectively. At the other extreme is Cyprus, where interest rates are just under 0.11%. Greece gives 0.20% and Portugal 0.35%. In addition to Spain, four other countries achieve returns of less than 1%.
Based on more than two years, Estonia takes the first position with just under 3% (2.94%). Luxembourg, Lithuania, Italy, France and Austria also offer more than 2%. Spain is the third eurozone member to pay the least, behind only Ireland (0.7%) and Portugal (0.14%).
The most attractive offers on Spanish soil are around 2.50% APR and come from neobanks
In Spain, it’s the online and startup banks that have been struggling for deposits in recent months as official interest rates have been raised after many years of remuneration at record lows. So interest rates have gradually risen and The most profitable offers are around or even over 2.5% APR. A few days ago, Renault Bank increased its term to 24 months at 2.83% effective annual interest. 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 their deposits for six months and one year.
Big companies, however, are reluctant to join the fray. The sector believes that due to the ample liquidity and while they’re likely to have to pay back savers’ money more heavily in the future because interest rates will continue to rise, he doesn’t anticipate high returns. Banking sources predict that average interest rates could exceed 1% or reach 2% “at most”.
Bankinter CEO María Dolores Dancausa is disappointed to see a “general” increase in deposits in the near term. From Asufin, they think a debt war is “very unlikely” and note that banks are more inclined to attract new employees. The Consumers’ Association claims the deposit market is still not moving because banks have no incentive to do so as they continue to widen their margins on the funding side, where rate hikes have quickly rolled over.
Industry and experts rule out a liability war due to the remaining liquidity
The same sources comment that the lower remuneration compared to other European countries is also due to “the even higher costs of the branch network, the bank tax in Spain and the smaller liquidity gap between liabilities and assets”. Víctor Alvargonzález, founding partner of Nextep Finance, believes that “the largest banks will hold out as long as possible before entering this type of competition and they will gradually increase deposit returns and create conditions to encourage their own cross-selling financial products.
the foreign bank deposits that can be completed through the Raisin platform are more generous. Compensations have always been a step ahead, reaching 3.35% APR in a French bank, 3.19% APR in a Lithuanian bank, or 3.05% APR in an Italian one. For her part, the head of fintech in Spain, Mónica Pina, believes that “the ECB has revived competition in savings and that hardly any bank can escape it in the long term”. He therefore believes that “savers can continue to wait for rate hikes and a larger number of offers”.