by Banks: With their announcements, Alpha Bank and Piraeus caused “numbing” to millions of their customers by changing deposit rates! Check out xristika.gr what’s going on…
A new wave of deposit interest rate cuts has started for term deposits and savings bank deposits in Greek banks.
Interest rates on savings deposits fell almost to zero, while interest rates on term bank deposits in Greek banks fell to historic lows in recent days.
For example, a term deposit of 100,000 euros has an average interest rate of 0.06% to 0.1%. And yet conditional zero interest rates are seen as positive investments, with inflation in February and March running at -1.6%.
At the same time, lending rates are set at levels of 3.8% to 4%, with the result that the interest margin of Greek banks has widened further.
These changes mainly have positive side effects in fixed capital investments and also in portfolio investments.
In the first category, the opportunity is given to investments with little money.
In the second category, savers become higher-risk investors by seeking returns in government bonds, corporate bonds, and stocks.
Banks: The deposits of the elderly are a “puzzle”.
Savings have increased during the pandemic, especially among older Europeans.
Barclays estimates that older people have amassed an additional €600 billion in savings. This sum would certainly give a boost to the European economy if it were spent on the shopping streets of European cities.
However, most analysts believe that much of this cash will remain idle and idle.
What is behind this accumulation? Negative interest rates across Europe are meant to discourage saving and encourage spending and investment.
For older savers, however, things are a little different.
Understanding how they react when interest rates are this low is essential if we want to encourage them to put their money at the service of the economy.
Very low interest rates mean that more savings or retirement benefits are needed to reach a given level of income.
The main interest rate of the UK central bank (Bank of England) is only 0.1%. This means generating an annual interest income of £10,000 requires savings of £10 million.
In the past, when the interest rate was 5%, as it was before the global financial crisis in 2008, this amount was obtained from savings of £200,000 and with very little risk.
The calculation becomes even more difficult when interest rates are negative, as is the case in the euro zone, where capital not only does not grow, but “erodes” over time.
Low interest rates are fueling the fear among retirees (and those looking to retire from work) that their savings will not grow over time and that the money will eventually run out.
Therefore, the idea of consuming this capital is uncomfortable and can lead to overly cautious or even phobic movements.
This problematic impact of low interest rates predates Covid. A 2017 study showed that many retirees in the United States continued to accumulate savings even after retirement.
People entering their 40s were wealthier than they were in their 60s or 60s, even taking inflation into account, largely because they hadn’t spent as much as their wealth did. would have allowed.
Indeed, the wealthiest spent 53% less than they could have.
Banks: No more deposit books!
In its (first) announcement, Piraeus Bank, referring to sustainable development with respect for the environment, informs its customers that it is proceeding with the adoption of the electronic way of information on the movements of deposit accounts, in replacement of previously paper forms.
Pursuant to the above decision, as of July 1, for private deposit accounts (savings, savings, current), the issuance and updating of deposit books, as well as the issuance and sending periodic copies of account statements (extracts) in paper form by mail, ceases .
Customer information on the movements of their deposit accounts will now be done via an electronic copy (e-statement) in the winbank electronic banking service, which offers the possibility of printing, saving and also searching for updates. older days.
On the website, as well as in the Bank’s Branches, customers can be informed of the revised General Conditions of Operations which will apply from July 1, 2021. In addition, for their convenience, the new online page https ://www .piraeusbank was created.gr/e-statement, in which depositors can find all the necessary information about the available information methods, as well as useful instructions for registering and accessing winbank.
At the same time, the executives of the Branches network are available to each depositor to guide him on the actions he must take in order to have direct access to the movements of his account at all times.
For further information regarding the change in information method, customers can contact the Piraeus Bank telephone service at +30 210 3288000 24 hours a day.
Banks: What are the most popular loans?
A typical example that emerges from the EBA study and which applies to a large extent to Greek banks concerns lending. Banks prefer to give loans with collateral, that is, housing and business.
However, from the data analyzed by the EBA, it appears that the largest percentage of over-indebted households comes from housing loans and not from unsecured consumer loans.
In fact, secured loans constitute the highest volume of loans at national and pan-European level and therefore present the highest risk on their balance sheets.
In terms of consumer loans and especially those related to the purchase of cars, banks try to offer them through commercial partners and other non-traditional banking establishments.
Thus, on the one hand, the risk is transferred from the banking institution to the consumer and to the financial and commercial units which are not directly supervised or do not fall under the strict supervisory rules of the national authorities and the ECB.
For their part, banks and national competition authorities respond that the current consumer trend is the demand for online and direct financing for everyday needs either by the bank or through merchants.
The digital transformation of banks is moving in this direction, which will strengthen digital sales of all products (deposits, loans, insurance) but also the interconnection of merchants with the banking system thanks to API technologies.
Furthermore, in the area of lending, the EBA found that there is a demand for foreign currency lending, but banks do not seem as willing to respond to this demand in order to avoid currency risk (for them- themselves and for the customer who, in the end, the customer’s risk will pass to the bank).
