Belgium's financial sector has been under intense scrutiny of late, in particular their resistance to increasing the savings rates offered to individuals.
Belgians hold over €300 billion in savings accounts – equivalent to well over half the country's GDP. But with inflation so high over the past year, the rates offered by major banks – none of them breaking 1% – mean that the value of savings has taken a pummelling.
You might assume that the turbulent economic situation worldwide means that banks can't afford to be too generous with clients; after all, the investment portfolios that banks maintain will likely also have been hit. Yet this supposition has been questioned and actively refuted, with critics pointing out that banks are raking in a profit from high ECB interest rates that they are withholding from savers.
This has certainly been good business, with Belgium's major banks seeing net earnings rise 25% in the first half of 2023 compared to 2022 – results that will have executives popping corks but make it difficult to argue that hard times are driving a policy of prudence.
Aware of the issue, Belgium's Finance Minister has been holding the banks' feet to the fire with his advantageous one-year bonds bringing in a record investment of €22 billion as citizens realised that they could do much better entrusting their savings with the government than with banks.
The move has subsequently been deemed a government success in bringing financiers to heel: banks have since started to increase interest on savings accounts. Moreover, a study released today highlights that providing clients with a better interest rate won't risk destabilising banks, whose "very abundant liquidity" would allow them to do so and still turn a profit.
Can we all be winners? Let @Orlando_tbt know.
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