Current accounts, interest on liquidity is rising (that’s why it’s a good sign) – Corriere.it

The interest rates paid to customers on current account deposits are increasing. For now they remain at low levels (0.11% on average in November against 0.02% in August), but the operators – ABI itself does not rule it out – expect an acceleration. After the increase in yields on deposit accounts, for banks it also means aligning themselves on this front with the policy of the ECB, which has implemented four interest rate hikes since July.

The banks are all in competition with each other – comments Antonio Patuelli, president of the Italian Banking Association -. They were blocked when ECB rates were at zero or negative. Now there is a lot of work to try to collect funds in the medium and long term. It means looking for customers, and rates are an important tool for reaching new ones. Behind the turning point there is also the increase in the cost of TLTROs (Targeted long-term refinancing operations), the funds granted by the ECB to banks so that they can use them for convenient loans to families and businesses. The increase in this cost, decided by the ECB in October and operational since November, has led to the anticipation of repayments by the banks throughout Europe – says Patuelli -. So thetoday the most sought after liquidity on the market. It is clear that banks are interested in having medium-long term funding.

The bulletin

According to the latest monthly bulletin of the Italian Banking Association, the average rate on current account deposits, which stood at 0.02% until August 2022, rose to 0.11% in November. Not much, absolutely, true: they are pre-tax figures. It means that 10 thousand euros now yield 11 euros gross instead of 2, i.e. 8.14 euros and 1.5 euros net after deducting the 26% tax (the stamp duty of 34.20 euros, expected on inventories over 5 thousand euros, must also be paid). But the increase is evident and significant, also because, notes the ABI, the current account remains above all an instrument for using the various services offered by banks, especially in payments. In the same bulletin it should be noted that, in general, the average rate on total deposits (not just current accounts for households, therefore) rose from the minimum of 0.3% in December 2021 to 0.42% of last November.

The Banco Bpm case

A sign of the change of perspective comes from Banco Bpm. In recent days, the institute led by Giuseppe Castagna announced to its account holders the reduction of expenses on inventories with the same motivation, linked to the monetary policy of the European central bank. We inform you – written in the letter to account holders, published on January 9 by Carlotta Scozzari on the Huffington Post – that, if the positive value assumed by the deposit facility rate (the rate on banks’ excess liquidity deposited with the ECB) remains confirmed, ed.), the Bank will cancel the increase introduced on periodic expenses with effect from 1 April 2023. In essence, for the institution led by Giuseppe Castagna, a return to the pre-Covid situation, given that these expenses had been increased in September 2020 and justified by the trend negative, then, of the deposit facility rate . It remains an intervention favorable to the customer e it may be the indicator of a wider phenomenon: that of the return of remuneration to current accounts, in fact.

The strategy and the times

Each bank will decide its own strategy independently, the ABI now essentially says. There could be a hike in deposit rates consistent with the European Central Bank’s upward interventions, just as in the past there has been a reduction when rates have been taken to zero or below zero. An effect of monetary policy that would affect the competitiveness between banks. The increase in wages on inventories is welcome – says Anna Vizzari, senior economist at Altroconsumo -, but we don’t expect an immediate revolution.

The increase in annual costs for inflation

Meanwhile, electricity costs are increasing, as a result of the general increase in prices. For example, on 23 December Bper sent a letter with the modification of the conditions on the current account fee, which went from zero euro to 0.37 from 1 March next and to 4.37 euro from 1 May 2027. Reason: inflation, indeed. According to the latest surveys by Corriere della Sera with Altroconsumo, considering the better economic conditions of the major banks included in the Altroconsumo panel,from February to September 2022 the cost of current accounts in the physical channel increased by 6.7% with an average cost of the overall cost indicator of 145 euros per year against 136 euros seven months earlier.