02.05.2019 | Estimated 8 minutes reading time | Print this article

Raisin’s Interest Rate Radar: May 2019

European Savers and Corporates Remain Parched 
Rates Shift in Europe’s Many Markets — But Not Together


Berlin, 2. May 2019. The pan-European deposits platform Raisin (www.raisin.com) regularly publishes the Raisin Interest Rate Radar to assess the ongoing effect of the ECB (European Central Bank) rate policy on savers throughout Europe. The data released by the ECB in April reflects rates up until two months prior to the release (February 2019).


European Commission to reassess Italy’s compliance with fiscal rules in June

Italy’s compliance with EU fiscal rules will be reassessed by the European Commission in June, taking into account a new Eurostat reading of its sovereign debt levels for the year 2018. The Commission had refrained from taking disciplinary action against Italy in December, based on an sovereign debt estimate of 131.1% of GDP. The new reading came out above expectations at 132.2%.

ECB rates remain unchanged in the light of mixed economic data

ECB policy rates remain unchanged. The Bank remains mildly optimistic in its growth forecast for the Eurozone, stating little risk for recession and suggesting that growth may accelerate to 0.4% per quarter in Q2 and Q3 from a weak 0.2% in Q1. Meanwhile, indicators elsewhere are pointing down. 10Y Bund yields remain negative. The German IFO business sentiment index fell to 99.2 in April, missing expectations for a slight improvement. The INSEE index for confidence in the French manufacturing sector also dropped to 101.1, its lowest level in nearly 2 years.

Brexit weighs on British currency, retail rates not yet affected

There are only marginal changes in retail rates in the UK and they cannot directly be linked to Brexit, but the never-ending drama revolving around the UK leaving the EU has had lasting implications on the British currency. Pound Sterling has lost about 15 % against the Euro since 2016.

This trend is likely to continue after Brexit, as a survey conducted by the Financial Times suggests Pound Sterling could lose its status as a global currency. Of central bankers asked in the survey, 75 % see central banks reducing their Pound holdings significantly, which would further devalue the British currency.

Further, a rising number of short sellers anticipate this scenario in their bets against the Pound. As long as uncertainty about Brexit persists, the British currency is unlikely to escape this scenario. A favorable trade deal with the EU might change the outlook — however, the existing contract has been voted down by parliament several times. The time for the UK to come to terms with the EU now runs out on October 31st.


RETAIL RATES: Within long-term downward trend, small shifts distinguish Europe’s individual markets


In the Euro area interest rates declined by 2 basis points on average due to a few big dips in February. Continuing its recent downward trend Luxembourg saw a decrease of 19 basis points compared to the previous month, sitting 9 basis points below last year’s interest rate. Latvia also experienced its first rate decrease in some months, with minus 22 basis points compared to January. Belgium, Finland, Malta and Greece all saw negative turns in the February numbers, swinging back down after their recent rate upticks.

Trending downward outside the Euro were Croatia and Bulgaria, with Sweden also dipping again slightly, just minus 2 basis points but consistent with their longer-term downward tendency (13% drop since last year).

And increasing…

On the upside we have a couple of notable increases from January to February. Surprisingly, France enjoyed a 19 basis points uplift, the first in some months, while both Slovakia and Slovenia also jumped upward, bucking their recent trends. Austria and Italy meanwhile continued to tick upward slightly, same as in January.

In terms of foreign deposits, we only see an increase in rates in the UK, which may indicate an effect of the Brexit tensions back in February.

Current Retail Deposit Interest Rates in the EU

Average interest rate for new deposits, private households; maturities ≤ 1 year, ECB data. Note: The Dutch Central Bank time-series for deposits with maturities up to one year includes a country-specific “construction depot” with higher average rates than overnight and term deposits.

Historical Development of Retail Deposit Interest Rates

Average interest rate for new deposits, private households, maturities ≤ 1 year, ECB data, in percent Note: The Dutch Central Bank time-series for deposits with maturities up to one year includes a country-specific “construction depot” with higher average rates than overnight and term deposits.


COMPARING OFFERS: With Ireland still stuck at the bottom of the rate pile and Italy near the top, Europeans’ choices haven’t changed

The current rates here for the UK paint a different picture to what we saw above, rates on offers continuing to slip downward compared to last month, possibly indicating a relaxation after the postponing of the Brexit decision. Of the other non-Euro countries on the other hand, Norway extended its upward tick in both 1- and 3-year rates while the remaining markets also saw mostly slight increases in rates.

The Euro countries overall saw minimal alteration, with just two trends continuing from the previous month: upward movement in 1-year rates in Germany and another drop for 3-year rates in Romania. Ireland persists with the lowest rates in Euro territory, while Belgium hovers just above it.

Interest rate “shears” open even wider for Germany and Denmark

The multiples measuring the gap between top offers and those of each market’s 3 biggest banks again changed very little compared to last month. The upward shifts in multiples for Germany and Denmark were caused by rate increases from one bank in each market, respectively. The huge rate gap in both countries has stubbornly stretched out to a difference of 38- and 36-fold respectively. Portugal and Sweden’s multiples meanwhile are significant but hovering at less than half that, with 16- and 13-fold differences respectively (the top offers also featuring higher rates).

France, Ireland, Poland, the UK and Norway have continued to escape the “interest rate shears” as the Germans have so aptly named it, recalling the widening maw of an open pair of scissors. In those countries top offers and the average of the 3 largest banks remain predictably close.

Highest Retail Deposit Interest Rates in the EU

Average of the top 3 term deposit offers for retail customers based on local comparison sites as of 30/04/2019. Criteria:  EUR 10,000 deposit; 1 product per bank; offers for both new and existing clients.

Retail Deposit Interest Rates of the 3 Largest Banks 

Average of 1-year term deposit offers for retail customers offered by the 3 largest banks in the local market; as of 30/04/2019. Criteria: EUR 10,000 deposit; offers for both new and existing clients. Usually, largest banks based on balance sheet size, which offer term deposits.


CORPORATE RATES: Most of Europe lingering under a tenth of a percent

With all of Europe remaining well under 1%, the average corporate deposit rates decreased by 1 basis point compared to January. While Austria was a clear winner in January, rates are now negative again with a decrease of 20 basis points. Similarly rate increases in the Netherlands and Luxembourg were reversed again with a 6 and 16 basis point decrease respectively.

Overall however, the bulk of Euro countries are hovering under a tenth of a percent, including Germany, France, Ireland, Slovenia and Latvia — with Belgium, Luxembourg, the Netherlands and Austria (as stated) under 0%.

Greece and Italy, unsurprisingly, are the only countries over half a percent, both having dropped slightly in February to at 0.83% and 0.61% respectively.

Current Corporate Deposit Interest Rates in the Euro Area

Average interest rate for new deposits, corporates, maturities ≤ 1 year, Euro Area Statistics

Historical Development of Corporate Deposit Interest Rates

Average interest rate for new deposits, corporates, maturities ≤ 1 year, Euro Area Statistics, in percent

Other Sources
Bloomberg, Bloomberg, Reuters, DW, the ECB and Raisin

Headline Image: Photo by Jakob Owens on Unsplash


About Raisin
A trailblazer for open banking and the leading pan-European one-stop shop for online savings and investments, Berlin-based fintech Raisin was founded in 2012 by Dr. Tamaz Georgadze (CEO), Dr. Frank Freund (CFO) and Michael Stephan (COO). Raisin’s platforms — under the brand WeltSparen in the German-speaking world — are breaking down barriers to better savings for European consumers and SMEs: Raisin’s marketplace offers simple access at no charge to attractive and guaranteed deposit products from all over Europe, as well as globally diversified, cost-effective ETF portfolios (currently available in Germany). With one online registration, customers can choose from all available investments and subsequently manage their accounts. Since launch in 2013, Raisin has brokered 12 billion EUR for more than 175,000 customers in 31 European countries and over 75 partner banks. Raisin was named to Europe’s top 5 fintechs by the renowned FinTech50 awards and is backed by prestigious European and American investors such as PayPal, Thrive Capital, Index Ventures and Ribbit Capital.