The vice president of the European Central Bank (ECB), Luis de Guindosgave news this Monday that Spanish savers have been waiting for two years: banks will begin to compete for capture deposits given the end of the excess liquidity that existed in the system. This means that will increase interest that they offer for deposits as a claim to attract new customers.
This movement represents a change of course for the large Spanish banks, which refused to increase the remuneration of their fixed terms as the Eurobank raised interest rates. Despite the stinginess of the big banks, Spanish savers have maintained their commitment to deposits and at the end of April they had more than one billion eurosaccording to the latest data from the Bank of Spain, for which they receive a interest of 2.49% on average.
De Guindos recalled during his speech at the seminar organized by the Association of Economic Information Journalists (APIE) and the Menéndez Pelayo International University (UIMP), that the ECB has on several occasions asked banks to compensate the liabilities for a correct transmission of rate increases.
And it is precisely when the guardian of the euro lower interest rates -in June the price of money fell by a quarter of a point to 4.25%- when the big banks will begin to improve the remuneration for their fixed terms.
The number two of the ECB has indicated that there are two explanations that explain this immobility of the banks: “The market structure, that there is a oligopolistic situationand another, which is the one that I think has weighed the most in this case, is the excess liquidity that was in the system, which was derived from the bond purchase operations that we are withdrawing. Or the famous TLTRO.”
De Guindos has acknowledged that certain modifications have occurred, such as a transfer of demand savings to term productsbut has reiterated that the banks “did not need” to compete for the remuneration of demand deposits given their high liquidity, that the ECB is withdrawingtightening the conditions of the TLTROs or through limiting reinvestment.
“This will lead, from our point of view, to there being more competition and that banks begin to compete more for deposits, including demand savings,” he indicated.
And the lack of competition in the remuneration of deposits is one of the arguments that the Spanish Government uses to show its disagreement with the hostile takeover bid than BBVA has launched on Sabadell Bank, although Luis de Guindos has avoided commenting on it as is his custom.
Regarding the process of reviewing the takeover bid and approval by the ECB, De Guindos has said that the institution is dedicated to reviewing the operation based on prudential and solvency criteria. To respond to the approval request, he has indicated, he has 60 days that can be extended to another 30.
He has acknowledged that the ECB is “in favor of cross-border mergers to create European banks and that the banking union is not complete, due to the lack of elements, for example, the single deposit guarantee fund or “pan-European” banks. “We want there to be European banks, not national banks with certain operations in other countries in the European zone,” he indicated.
