BNP Paribas announced yesterday to set an upper limit, a kind of ceiling, to its savings accounts. From now on, the savings account of the first Belgian bank will be capped at an amount of €250,000 from April. A decision which also applies to the savings accounts of the two subsidiaries of the BNP Paribas group, namely Hello Bank! and Fintro.
What are the reasons ?
The monetary policy of the European Central Bank: to stimulate the economy, consumption and investment by households and businesses, the ECB has implemented penalties for banks that hoard savings… and therefore also for customers who let them sleep these savings without reinjecting them into the economy to make it work. Result: interest rates at the floor, but also negative interest rates. And this sleeping money therefore ends up costing the banks money.
Why ?
In Belgium, the law requires banks to pay a minimum interest rate of 0.01% and a loyalty bonus of at least 0.10% on amounts placed in regulated savings accounts. Whereas when the bank deposits these amounts at the European Central Bank, it receives zero or even negative rates. In short, these accounts, especially with large amounts, become a cost for the bank.
How many customers will be affected by this measure?
Very few customers. BNP Paribas considers that less than 1% of customers are affected, but does not say what the total sums are at stake.
BNP Paribas only imitates other Belgian banks
I have spoken to you regarding it regularly over the past few months. Triodos has decided to remove the regulated status from its savings accounts and reduce their interest rate to 0%. ING Belgium also caps its savings accounts at €250,000 and even applies a rate of -0.5% to its non-regulated accounts on the amount exceeding this sum of €250,000. And professional accounts are subject to the same type of policy.
Another measure at BNP Paribas Fortis – and ultimately quite logical – is to prevent savers from having several regulated savings accounts, which would allow them to escape the ceiling. This will not apply to accounts opened prior to yesterday’s announcement.
Are the banks making money with these negative rates?
Yes, because some savers cannot or do not want to risk their money in riskier investments. So they pay for the bank to keep their money. And it can indeed pay off.
Questioned in the federal parliament, the Minister of Finance estimated that the banks took 86 million euros in 2020 and 79 million euros in the first half of last year on these penalties for large deposits.
So let’s not fantasize, these amounts weigh little in the corresponding profits of the banking sector, between 2% and 2.5% of the sector’s net profits for these periods.
Conclusion
Either the big saver will continue to pay for his dormant savings, or he must risk investing his money in investment products.
