After almost €22 billion in State bonds was released back into the Belgian economy at the start of September, commercial banks have managed to recuperate the bulk of these household savings.
In September 2023, Belgium launched a special one-year State bond which allowed citizens to lend money to the government with a one-year maturity, instead of the usual period of at least three years. The bond – offering a net yield of 2.71% and a halved withholding tax (15% rather than 30%) – was a last-ditch attempt to push banks to increase their interest rates on savings accounts.
The huge popularity of the bond reflected the desire among savers for higher interest rates. The bond initiative – spearheaded by the outgoing Finance Minister Vincent Van Peteghem (CD&V) – became Belgium's most successful capital operation among citizens. Over half a million people subscribed to the one-year State bond, raising a record €21.896 billion.
By the time September 2024 came around and households were due to receive their initial one-year investment plus interest, banks were vying to win back the almost €22 billion in savings capital, with many offering better interest rates than they had the year before.
Majority returned to commercial banks
In a statement on Thursday, Belgium's central bank (the National Bank of Belgium) confirmed that the large majority of the €21.9 billion invested in the one-year State bond has been returned to commercial banks.
Term deposits were the most popular option for investors in State bonds (attracting €18.2 billion), followed by savings certificates (the destination for €5 billion).
The NBB noted that rates offered for these products also prompted savers to move funds from regulated savings deposits and sight deposits, which saw outflows of €4.4 billion and €2.8 billion respectively.
Only €400 million was re-invested in a new State bond issued on 16 September. The NBB said that the year-long bond issued in September 2023 affected the Belgian deposit market in two key ways.
On the one hand, there was an increase in the average interest rate for term deposits as banks competed to win back investors. But this didn't have a visible effect on the corresponding interest rate for regulated savings deposits.
On the other hand, the proportion of total Belgian household deposits invested in term deposits grew from 11% to 15% in one year – a real-terms increase of €22.3 billion. This uptrend has been noticeable for the past two years, the NBB concluded.
