Bank stops charging business deposits after three years

The big banks stopped collecting business deposits after three years. With the rise in official interest rates, which the European Central Bank (ECB) began to apply from July 22, entities have begun to inform customers that they will no longer charge interest on cash deposited in the bank. It should be noted that the majority of Spanish banks did not charge individuals for the custody of their deposits, but rather a certain type of customers, such as institutional customers and large companies.

However, despite the fact that the interest rate hike took place in the penultimate week of July, entities no longer charged deposits to large companies in June, as evidenced by the latest data published by the Bank of Spain. The weighted average rate applied by banks to companies in June was positive, at 0.328%, whereas a month earlier it was negative, at -0.093%.

The financial industry has started to charge large customers such as businesses, family office or institutional investors for deposits in January 2019. Then, the deposit facility was already negative, at -0.4%, whereas it had already walked on this ground five years earlier, in June 2014, when the ECB had placed it at -0.1%. Since then, it has continued to descend, until reaching the minimum level in September 2019, with -0.5%where it was until the rate hike last July.

The European supervisor decided to raise all official rates by 50 basis points, which brought the deposit facility to 0, a level not seen since 2013. During these last years of negative deposit facility, the entities of the euro zone had to pay the ECB for the liquidity parked in the body, until in the case of Spain, in 2019, they started to transfer the cost to certain companies. A situation that has come to an end, according to the financial sources consulted by this newspaper.

This step will enable businesses to save money at a time when inflation weighs heavily on business expenses. The financial sector expected the end of the collection of business deposits for September, even if this was finally brought forward by three months. Initially, the ECB was to raise rates in July by 0.25% for a second hike at the end of the summer. However, the agency preferred to act more forcefully in the face of high inflation, than last June reached 8.6% in the euro zone, five tenths more than the previous monthaccording to the latest data from the Community statistics office Eurostat.

The ECB’s objective with this gradual normalization of monetary policy is to bring inflation back to the 2% threshold in the medium term.




The increase in the deposit facility closes the door for the financial sector to extend the collection of deposits to other customers, such as individuals. Although most entities have always stated that they will not charge users detail for deposits, fearing a leak of the same, there were banks that had indeed begun to transfer the cost to certain customers.

BBVA advanced in early 2021 and started to apply a rate of 0.025% per month o 0.3% per year to a small number of customers (0.2%) with few connections and with balances greater than 100,000 euros. Box of engineers too started charging 0.3% to customers in the middle of last year Premium Bank and Individuals from €100,000, measure that you have already deleted. ING, for its part, applies a commission of 10 euros per month for custody of balances to customers with no payroll and having more than 30,000 euros in the entity.

Brief moment of ‘joy’

With this situation out of the equation, customers could now face new costs for the specific rate that the government of Pedro Sánchez plans to impose on banks. The executive raises a 4.8% rate on the interest margin and net bank commissions, as long as its revenues were above 800 million euros in 2019, before the impacts of the pandemic. The government intends to raise 3,000 million euros with this measure.

The European Banking Federation (EBF, for its acronym in English), led by the president of Santander Ana Botín, has already indicated at the beginning of this week that these fees will end up being paid by customers because current banking regulations require entities to pass on all costs to prices. However, the government rule sets a penalty of 150% of the amount returned to users.

Both the EBF and the Spanish employers’ associations (AEB and CECA) consider that the executive tax, far from helping the economy, will have the opposite effect, since it will harm the ability to revive the sector and the financing capacity of the economy. The CEO of the Santander, José Antonio Álvarez, said on July 28 that the tribute could reduce credit by 50,000 million.

Payment will take

The recent rise in interest rates leaves the yield on household deposits unchanged. With the threshold at zero, the financial sector does not anticipate that the balances will be updated in advance and they transfer this scenario to the middle and end of 2023. According to the sources consulted by this newspaper, for the bank to give remuneration to customers They still have to raise the rates a lot, until they are around 1% or 1.5%. At that threshold, they say, one would then expect a deposit return of around 0.5%. For the moment, none of the large entities are planning to update the balances since their strategy It does not go through the capture of deposits because they have enough cash to extend credit.

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