European interest rates show unique spreads: Raisin analysis
An analysis of European interest rates by Grape DS shows that what you earn depends on where you live.
The average rate in Germany hit a recent low of -0.04%, according to the ECB. The Spaniards get a measly 0.01%, but the French and Italians get a relatively robust rate of 0.47%.
Corporate rates show a similar spread. In Germany, it recently fell to -0.49 percent. The French are at 0 and the Italians get 0.18% on their short-term deposits.
Raisin’s analysis shows that Germany, France, Austria and Spain see fewer options while those of the UK, Italy and the Scandinavian countries still benefit from a significant gap of interest rate, ranging from over 0.8 percentage point in Italy to over 1 percentage point in the United Kingdom. , Sweden and Norway. The highest one-year rates of the German-led group continue to fall. The spread in Spain is less than three tenths of a point for time deposits while it is around half a point in Germany.
“Despite falling interest rates to historically low levels in many EU countries, European consumers and banks face very different opportunities in the savings market. Europeans continue to save more than ever and companies have increased their liquidity position ”, Dr Verena Thalersaid Raisin DS, vice president of strategy and business development. “Yet only some have access to competitive interest rates in their own markets while others are penalized by negative interest (especially SMEs and corporate clients). Likewise, the cost of financing retail deposits varies considerably for European banks across countries. “
The dramatic differences between these two Europes mean financing possibilities for banks in competitive markets. Offering deposits in the less competitive markets can mean not only diversifying, but also increasing liquidity more profitably than in their own markets.
Customers of the three largest banks in Germany, the Netherlands and Spain respectively, currently have no fixed-term deposit options bearing interest in the popular one-year term.
Less than 0.05%: The largest banks in Austria and Poland, Sweden, France, Ireland and Portugal offer one-year fixed-term options averaging at or below this rate.
About 0.1 percent: Consumers at major banks in Belgium, Italy and the UK have a choice equal to or greater than 0.1 percent.
Almost 0.5 percent: Norwegians banking at the three biggest banks can find one-year deposit products with interest rates at almost half a percent.
Highest rates over one percent: Consumers in Norway, Sweden and the UK can select the best one-year deposit products available – offers from small banks – for rates above 1%. Tariffs for Polish and Italian consumers are approaching 1%.
European households saw their net inflows increase by 10% between May and June. With consistently high savings volumes, the best bets for depositors are moving away from the biggest banks. The UK was the only economy to show a significant increase in maximum term deposit rates. Funds transferred to these less competitive markets and savers may see, for example, rates of 0.425 percent on three-year terms in Spain.
In June, ECB data showed that the average consumer interest rate in the eurozone fell to 0.14 percent. Only four countries in the European Economic Area (Belgium, Finland, Ireland and Luxembourg) and the United Kingdom have an average interest rate higher than a year ago, while that of Spain has remained at 0.01%.
Germany, Denmark and Ireland are the worst markets for businesses, with average negative interest rates ranging from -0.45% to -0.49%. The Benelux countries, Austria and several Eastern European markets are almost as bad with average interest rates ranging between -0.26 and -0.37 percent. Spain fell into positive territory at 0.2 percent, while Italy fell three-tenths to 0.18 percent.
“A crucial step in addressing this inequality of opportunity is to strengthen the European Banking Union, an initiative that the European Central Bank (ECB) continues to promote,” Thaler said. “As ECB Vice-President Luis de Guindos pointed out in his March 2021 speech on the subject, the Banking Union will bring greater stability to European banks, and therefore also to consumers. Increased stability means that consumers and banks can more securely seek opportunities not only in their own markets but across Europe, including competitive savings offers and sources of liquidity. The establishment of a single, harmonized European deposit guarantee system (EDIS) is particularly essential to this European-wide security and therefore to this increased opportunity, as de Guindos explained.
“Research conducted by the European Commission earlier this year found that the euro is 80 percent supported across the euro area. This is a particularly strong sign of support for the single market and our monetary union which creates benefits and opportunities for all. From now on, Europe needs its Banking Union so that everyone – consumers, businesses and banks – can have the same access to the best of European markets. “