A record number of Belgians have switched banks over the past year, as savers continued to try to find the best interest rates for their hard-won earnings.
According to figures released by Febelfin, the Belgian financial sector federation, over the first nine months of this year 23,558 people formally applied to close their savings accounts via Bankswitching, an online service that facilitates swapping bank accounts. This represents a staggering 40% increase compared to the same period in 2022.
"In the context of rising interest rates, consumers seem to be comparing the various savings offers from banks more than before," Febelfin noted. "Previously, the rates were low and it was perhaps less relevant to compare. [Bankswitching] also seems to be becoming more and more known to consumers."
No impact of state bonds
Interestingly, the Febelfin study suggested that the successful issuance of the special one-year "Van Peteghem" government bonds (named after Finance Minister Vincent Van Peteghem) in August had little if any impact on savers' desire to switch banks, l'Echo reports.
In particular, the report found that there were 7,735 requests to close savings accounts in the third quarter of this year: more than in the second quarter (6,700) but still fewer than in the first (9,000). "Based on these figures, it is difficult to measure the 'state bond effect' on banking mobility," l'Echo noted.
By design, the bonds offered an attractive alternative to the savings rates offered by Belgian banks. Indeed, Van Peteghem himself noted that the bonds' main purpose was to "boost competition and encourage banks to raise interest rates". Roughly €22 billion of the bonds were eventually purchased.
Poorly rated rates
Belgium's financial institutions have come under increasing pressure to increase their savings rates over the past few months, as repeated rate hikes by the European Central Bank (ECB) have largely failed to be passed onto savers.
At its last meeting in September, the ECB increased its benchmark deposit facility rate by 25 basis points (0.25 percentage points), bringing it to a record high of 4.0%
According to a recent analysis by consumer rights organisation Test Achats, the savings rates offered by Belgium's banks are on average less than one-eighth the benchmark rate offered by the ECB.
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"While banks can now deposit their money at the European Central Bank at 4%, the average interest rate on savings accounts in July was only 0.49%," Test Achats noted. "This is an unfair and unacceptable situation."
Experts also attribute the financial sector's soaring profit margins over the past year to the large discrepancy between the ECB rate and the interest rates offered to savers.
Belgium's six largest banks (BNP Paribas Fortis, KBC, ING Belgium, Belfius, Argenta and Crelan) recorded total net earnings of €3.1 billion over the first six months of 2023 – roughly a quarter more compared to the same period last year.
