Interest rates: are banks filling their pockets? – Business

It’s typical again: from this Wednesday on, the European Central Bank (ECB) will no longer charge banks negative interest if they park their money in them for a short time. And how many banks have already announced that they will no longer charge their clients with negative interest rates? Only 52 of the approximately 455 credit institutions, according to the Verivox financial portal. This raises the suspicion that banks are shifting a burden on their clients that they no longer have.

On the other hand, mortgage rates have jumped like never before in recent weeks, from less than one percent for the ten-year fixed rate to over three percent. The interest banks charge their customers for loans has literally exploded, and the interest they pay customers on their deposits remains fairly low – this seems to confirm all the bias against banks: they are apparently taking advantage of the ECB’s interest rate change to bolster your pockets.

It is therefore time to say something about the relief for German banks and savings banks: it is not as clear as it seems at first glance. Be careful not to say that they are robbing their customers. At the same time, the time has come to criticize banks and savings banks, but for a different reason.

On negative interest: it is too early to blame credit institutions for not having adjusted their terms yet. Many do it nowadays, many always change the conditions at the beginning of the month. August 1 is going to be exciting: banks that still charge negative interest on customer deposits are acting guilty and should be publicly accused.

Rather, banks and savings banks should be criticized for complaining about the ECB

As for mortgage rates: it is true that interest rates for customers rose quickly, much faster than in the capital market. However, it must be taken into account that banks must also take into account the increased risk in the interest rate on new customers; mortgage defaults became more likely at higher interest rates. They also have to compensate for the fact that they will receive low interest rates from many clients for a long time, but will now be able to refinance at higher interest rates. The banks don’t seem to be stuffing their pockets.

Regarding interest margin in general: It is not unacceptable for banks to set debit interest higher than credit interest. Every buyer does this, no one sells the product cheaper than buying it himself. It is also not unacceptable that the interest margin is higher when interest rates are higher than when they are low. Banks have to make a living. Ideally, they should follow a sound business model that does not disadvantage customers. If you compare German banks with British or US banks, customers are still doing well.

What can be criticized for German banks is their whining and complaining in recent years. By their constant criticism of the ECB’s low interest rate policy, they gave the impression that there was a simple solution. As if the central bank only had to raise interest rates and everything would be fine. The ECB kept interest rates low because otherwise the euro would collapse and the economy would collapse. He also kept the risk for banks low – for large banks the risk of default on Italian government bonds, for savings banks and Volksbanken the risk of default on corporate loans. In addition, the ECB has eased the burden of negative interest rates for banks through tax breaks and other simplifications. Lately, despite groans, they haven’t been a burden on the balance sheets.

The ECB is not raising interest rates now because it is succumbing to the complaints of German banks, but because it is trying to control high inflation. The danger is that doing so increases the risk it holds in check with low interest rates. Savings banks and Volksbanks are already complaining once again that the ECB must be careful not to stall the economy. As if there was an easy solution to that.

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