The head of one of Belgium's leading banks has claimed that there is little meaningful competition in the country's commercial banking sector and praised the "positive" economic impact of the recently issued special one-year government bonds.
In an interview with L'Echo, MeDirect CEO Alain Moreau also endorsed the oft-cited criticism that repeated interest rate hikes over the past year by the European Central Bank (ECB) have left Belgian banks with ample room to increase customers' savings rates.
"The competition has been greatly reduced for several years," Moreau said. "This can be explained by a low interest rate environment, which had made the competition more difficult, but despite the increase in rates, we could see that this competition was not returning."
Moreau added that the low savings rates offered by most banks have enabled MeDirect, an online-only institution employing just 60 people, to "stand out from the rest".
"We have actually been quite dynamic for several months on the savings market," he said, noting that MeDirect's high rates have allowed it to attract numerous new customers in recent months. "In terms of new savings deposits, we have already exceeded our goals for the entire year."
'The view we have is positive'
Moreau also strongly disputed the suggestion that the so-called "Van Peteghem" government bonds are unfairly competing against banks' traditional savings rates.
"The view we have [of the bonds] is positive, because the government bonds campaign pursues the same goal as us: to recreate banking mobility, dynamism and visibility," he said.
Moreau's views differ markedly from those of other banking CEOs, many of whom have taken issue with the fact that Van Peteghem bondholders benefit from a special reduction of the usual bond withholding tax rate from 30% to 15%.
"If the government says it is doing this to favour a certain segment of the population, they must offer those benefits to all citizens who invest in similar products with a term of one year," KBC boss Johan Thijs said earlier this month.
Related News
- Belgium in Brief: Are you buying State bonds?
- 'A breath of fresh air': Van Peteghem bonds alleviate Belgian public debt concerns
The bonds, named after Finance Minister Vincent Van Peteghem, offer an attractive alternative to the savings rates currently provided by Belgian banks. Their effective yield is 2.81%, well above the long-term savings rate offered by most commercial financial institutions.
Thijs, however, claimed that he did not necessarily object to the fact that yields on the bonds are higher than the savings rates currently offered by Belgium's banks.
"One of the arguments put forward by the government to justify the new state bond was that it wanted to offer investors a better return," Thijs said. "I understand that, but then, we must also reduce the withholding tax."
The bonds have proven to be wildly popular among Belgian savers. More than €16 billion of the assets had been purchased by Wednesday evening despite only going on sale last Thursday.
