The continuous increases in interest rates in the last year have triggered the pressure on banks to remunerate deposits. This has caused a revolution in the storefront of savings products. Especially in the one aimed at paying the best clients of the banks, those with the greatest wealth.
International banks have taken the lead in the market for large fortunes in Spain and are competing fiercely in a deposit war, with offers outside the market.
The big American banks, like JPMorgan, Citi, or Goldman Sachs; Swiss banks, such as Edmond de Roths-child, Julius Baer, Safra Sarasin, Lombard Odier or Mirabaud; and even some Europeans, such as BNP Paribas, which only provide services in Spain to clients of large fortunes, very competitively transfer the rise in interest rates from the ECB and the Fed to more traditional savings products, such as deposits.
Although banks have been paying for savings in this customer segment for months, in recent weeks an offensive has been launched to attract liquidity and the remuneration of high net worth individuals has skyrocketed to percentages above 4% per year for their deposits, according to sources From the market. The most generous move even above 4.5%.
The hook is even greater in some entities that have broken the market with offers that move around 5.75% in one-year deposits in dollars. In the United States, the official rates are at 5.25%. The reason why the return on deposits in dollars is higher than those referenced to the euro lies in the exchange rate. The saver can greatly increase the performance with the appreciation of the currency against the euro.
The strategies depending on the entity are varied. In private banking, this is not the same as in the commercial banking segment, in which banks design standard offers for all customers, but it varies depending on different parameters.
While the final objective is the same, to attract new clients or increase the liquidity positions of clients with whom they already work, some entities apply these offers generally to all their clients, and others are being selective, offering the best conditions in depending on the client’s assets, the type of products they have contracted with the bank or the amounts to be paid.
These entities have opened a commercial war in Spain for increasing the positions of their clients at the expense of their most direct competitors.
In private banking it is easier to compete for these balances (the operation is simpler), since high net worth clients usually work with several banks, in most cases, with at least one national entity and another of international origin. For this reason, customers who claim a return for their liquidity and cannot find it in their reference entity do not need to open a new account in another bank, just transfer the money.
Spanish banks with powerful private banking divisions are also paying their high net worth clients on time. However, the remuneration does not reach the levels at which foreign entities move. Offers slightly exceed 3%.
On the other hand, although they have experienced significant increases from the historical lows of last year, the returns on individual deposits are still far from significant levels. The weighted average rate at the end of April stood at 1.33% for a term of up to 12 months, very far from the average of 2.27% in the euro zone.
These stark figures are far from covering the sharp rise in inflation. To achieve significant returns, you have to go to foreign medium-sized banks or digital entities.
Yesterday, EBN Banco launched an express offer for current bank clients that will last from July 1 to July 17. It pays 2.5% for four months, 3% for six months, 3.15% for nine months and 3.20% for one year.
In the case of offers to companies, banks are being much more diligent in transferring the rise in official interest rates to the remuneration of their clients. Until April, they were paying 2.60% on deposits up to one year, one percentage point above the 1.60% at the end of 2022. It must be remembered that until March of last year companies were paying to deposit their money in the banks.
In the case of deposits to companies, remunerations are much more in line with the euro zone average, which at the end of April stood at 2.79%. Above this figure is the 2.80% that, for example, EBN Banco offers in its non-cancellable deposit for companies.
