Responding to the launch of the one-year State bonds with a much higher interest rate (of 3.30%) than that of savings accounts, the Argenta bank responded by temporarily offering a term account that yields the same net income as the bonds, as well as offering high rates over three years.
The initiative by Federal Finance Minister Vincent Van Peteghem to force the banks to raise interest rates by competing directly with them has had a big impact on the sector. Now, one of the larger players in the private market in Flanders, Argenta, has launched a three-step plan.
While Argenta is not offering the bonds, it is launching a high-yield term account for one year and one for three years. The one-year term account has the same net yield as the State bond: 2.81%.
However, because Argenta has to withhold 30% withholding tax, this comes down to a gross interest is 4.01% – higher than what Argenta can get from the European Central Bank (ECB) or collect on its Belgian home loans. However, Argenta also has an important branch of home loans in the Netherlands.
Argenta's offer is temporary: clients can only register from today (Wednesday 23 August) until 1 September.
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The 4.01% offered by Argenta is the highest gross interest in one year on a term account. The bank was once the pre-eminent price breaker but had in recent years evolved into a mid-range performer, De Standaard reports.
Under pressure from the government now, however, Argenta is reinventing itself as a price breaker, which is good news for Van Peteghem: the bank must collect a 30% withholding tax (which goes to the State) on all money that it collects. On the State bonds itself, that is only 15%, meaning the treasury will also benefit from Argenta's initiative.
Additionally, the bank is increasing the rates for a three-year term account, which will yield 2.52% net (amounting to a gross yield of 3.60%).
The yield curve has been inverted for some time, meaning short-term interest rates are higher than long-term. "With a three-year term account, we give the customer the opportunity to retain the higher interest rates for longer," Christine Vermylen of Argenta told Het Nieuwsblad.
