Four smaller banks that launched a term account with a significantly higher interest rate during the registration period for the one-year government bond have now (as expected) reserved the offer. This should come as no surprise as the banks said from the outset that the offer was temporary.
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Temporary offer of higher interest rates at four banks reversed as expected after government bonds issue
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At the end of August, Argenta, Axa Bank, Deutsche Bank and Beobank all came up with their own alternative for the government bond. They raised the interest rate on their 1-year term accounts to 2.81% net or even more. Like with the Government bond savers were given until 1 September to register.
Now that the registration period for the one-year government bond has closed, the higher interest rates offered by the banks on their one-year term accounts are now also a thing of the past.
More competition?
The Federal Finance Minister Vincent Van Peteghem (Flemish Christian democrat) says that he wishes to wait a few more weeks to see what the impact of the government bonds issue will be on the interest rates that banks offer to savers.
He adds that "We could also still launch a government bond in December. Everything will depend on the context and what happens with the banks in the coming weeks."
Mr Van Peteghem believes that more competition in the banking sector could benefit the customer. "When you're in a competitive environment, it's a case of all hands on deck day in day out because you have to offer the best conditions to customers. That's exactly what we aimed to do by with the government bond and I'm convinced that we achieved this."
Banks critical
The banks of course take a more critical view. The (state-owned) Belfius Bank warned on Friday that the success of the government bond could lead to more expensive home loans, as the bond has drained billions of euro from savings accounts. This is money that is used to finance mortgages.
At BNP Paribas Fortis too they say that the government bonds issue was a "serious stress test" for the banks. More than 6 billion euros flowed from BNP Paribas Fortis customers’ savings accounts to the government bonds issue last week.
The bank’s CEO Michaël Anseeuw has called for a ceiling to be set on how much can be raised from a government bonds issue as is the case with corporate bonds. Mr Anseeuw told journalists that with a cooperate bonds issue "It is also made very clear in advance how much money you expect to collect. For example: 2 billion euros. And if 4 billion is collected, everyone is able to invest 50% of what they had want to invest. It would be a good idea to apply to same rules to government bonds ."