The upward path of interest rates has once again put on the table commercial strategies almost forgotten by banks in recent years. The market is expectant before the announcement of the European Central Bank, which could leave the official interest rate close to 2% in the euro zone after raising it by 0.75 points. Does this new environment place the Spanish financial system at the gates of a war for the long trillion euros that accumulates in bank deposits? Will the remuneration of savings, which now does not even reach 1%, be increased at least? Officially, no one gets wet: no one sees it any time soon… but in reality everyone is waiting to see who will shoot first. “It’s what logic says,” say sources in the sector who also point out that this process will end up being activated: “As soon as one opens fire, everyone will follow. They can’t be left hanging. Of course, this is going to be encouraged.” Currently, with 30%; Santander Bank, with more than 20%; and BBVA, with almost 15%, account for almost two thirds of the deposit market.
Santiago Carbó, director of financial studies at Funcas, points out that it would be strange if, with this rate hike, the big banks did not make any move. This expert is also clear that at the moment in which one offers something, the rest will follow, because so far no one had moved. Other sources predict that there will be Aggressive but more punctual offers and in banking entities that do not have high cost structures: “The more traditional banks already have a more adjusted profitability”.
In Spain, a situation of enormous competition between banks was already experienced in 1989, when the Santander Bankat that time chaired by Emilio Botín, broke the status quo Spanish financier. The entity launched the Santander Superaccount, the first high-paying current account. Santander then broke the banking market with a product that paid 11% interest, while its competitors offered an average of 5%. Its customer base skyrocketed, as did its volume of deposits. The response from the rest of the entities was not too quick and, in just a few months, Botín’s bank went from a market share in deposits of 8.5% to 14%.
In a somewhat similar way, ING gained market share shortly after landing in Spain in 1999: its main claim consisted of a good offer to remunerate deposits that could be maintained until interest rates began to fall during the financial crisis of 2008.
This reality of walking towards a possible liability war is nuanced depending on the size of the entity. From one of the main Spanish banks they point out that, even if interest rates are set at 2%, entities will not want or be able to pay even 1% for this type of product. “The big banks neither want nor are going to incentivize this war. In other times there was a fight over deposits because there was a lack of liquidity“, assures this source, who highlights that now it is precisely liquidity that the largest entities have left over. In addition, he also argues that the big banks have better options to offer their clients. What they will be able to do is “suits to measure” to its most important clients: remuneration offers to retain large capitals, probably in exchange for a greater commitment to permanence.
Manuel Romera, Director of the Financial Sector at IE Business School, maintains that the large Spanish banks will end up entering this competition safely once it begins and that they will do so in a disruptive manner and seeking consumer impact. This expert, however, highlights the movements of entities such as EBN Banco and Wizink.
Certainly, if you look at the market, you can see that currently there have been no notable movements in relation to the remuneration of deposits, with exceptions in some players that correspond to neobanks, digital banks and foreign banks with little representation in market share and that they need to expand their client base and gain notoriety.
plenty of liquidity
In parallel, Myinvestor sources also point out: “At a time when banks are going surplus of liquidity, we do not believe that there is going to be a debt battle motivated by retail liability needs”. For their part, other sources in the sector point out, in addition to the good solvency capacity, another added factor also prevents a war for deposits between banking entities from being in sight: “The banks will take a year to update the interest rates your credit portfolio at a variable rate, at which point it will make more sense to match the financial income with the costs for remuneration of savings”.
In addition, in a difficult economic situation, such as the current one, with the energy crisis and with a more than likely recession just around the corner in 2023, more and more voices are warning of the increased risk of default, about what Myinvestor sources emphasize: “On the part of the financing at a variable rate, it is foreseeable that the delinquencies go up. In this environment, [los grandes bancos] They do not have much margin to remunerate deposits if they want to get out of the pothole & rdquor ;.
Related news