Belgium's financial sector is "an oligopoly" in which competition is deliberately suppressed by the country's major banks, according to a recent study by the Belgian Competition Authority (BCA).
The report, which was commissioned by Belgian Economy Minister Pierre-Yves Dermagne (PS) in June, described the country's banking sector as "dominated by four major players," namely BNP Paribas Fortis, KBC, Belfius and ING Belgium.
"This oligopolistic nature implies in particular that actors are likely to easily observe the behaviour of their competitors and adopt a similar line of conduct reflecting their shared interests," the BCA noted. "We see that the four big banks tend to ride in a pack and offer substantially similar business terms to consumers."
The report illustrated the point by noting that the four banks' proffered savings rates have "historically and systematically been lower" than those provided by smaller financial institutions.
Economy Minister Pierre-Yves Dermagne. Credit: Belga / Dirk Waem
It also reported that the sale of special high-yield government bonds last summer failed to achieve its core aim of triggering "a widespread increase in bank savings rates".
Belgium's major banks have enjoyed bumper earnings over the past year, as repeated interest rate hikes by the European Central Bank have largely failed to be passed onto 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 than in the same period last year.
'Savers deserve more respect'
Dermagne claimed that he was not surprised by the report's findings. "The research confirms my impression that the major Belgian banks ride in a peloton, to use a cycling metaphor," he said. "That there is a problem with competition is certain, but solutions are possible."
The solutions alluded to by Dermagne, and explicitly recommended by the BCA, included abolishing fidelity premium rates, providing savers with better means of comparing rates offered by different banks, and offering citizens a portable IBAN to allow them to switch banks more easily.
Laura Clays, a spokesperson for consumer rights group Test Achats, expressed strong support for the BCA's proposals.
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"We hope that the report of the competition authority does not go unanswered and that the government takes action on the proposed measures," she said. "Especially when they are easy to implement, such as abolishing the fidelity premium rate."
Finance Minister Vincent Van Peteghem (CD&V) added that he would discuss the report's findings with Dermagne in the coming days and that the Federal Government would "investigate and implement the recommendations of the BCA where necessary and possible".
"In recent weeks we have seen several banks are moving [interest rates], but the big banks are still not fighting enough for the confidence of the savers and that must be different," he said. "Because savers deserve a correct interest rate and more respect."
