Interest rates set by the European Central Bank have been continuously raised since June 2022. The main interest rate is now 4.25 percent. The deposit rate, which determines the savings rate for consumers, is 3.75 percent. According to the liberal business institute Agenda Austria, only a fraction reaches the saver, but the transfer rate is relatively high in this country. According to the AK-related Momentum Institute, Austrian banks have earned 1.58 billion euros since August 2022.
Italy’s right-wing government recently announced a one-off excess profit tax for banks as higher interest rates are not passed on. After severe stock market turmoil after the short-term announcement, this additional tax was again sharply reduced – to a maximum of 0.1 percent of the institute’s balance sheet total. There are special taxes for banks in Europe in left-wing Spain and right-wing populist Hungary.
FPÖ for excess profit tax, Minister of Social Affairs invokes VKI lawsuit
In Austria, the FPÖ demands a skimming tax from financial institutions. The SPÖ called for government intervention. The federal government rejected the call for a special tax. She is taking a collective action through the Association for Consumer Information (VKI), Minister of Social Affairs Johannes Rauch (Greens) announced on Tuesday.
Less than a third of the increased interest was passed on
A list by Agenda Austria based on information from the Financial Times shows that key interest rates passed on to savers in Austria are relatively high since the rate hikes. Only the banks in Great Britain, France and Luxembourg have passed on interest rate rises to a greater extent to savers. Nevertheless, the data shows that only 29 percent of interest rate hikes in this country were passed on. Britain leads the way with 43 percent, while Ireland and Slovenia are at the lower end of the scale with just seven percent. In the eurozone and Germany it was 20 percent, in Italy, which is introducing the special tax, 11 percent.
Domestic banks have parked 115 billion euros at the ECB since September last year, according to the Momentum Institute. They would have earned 1.58 billion euros in the past eleven months. They have not passed on the interest rate increase received. While the deposit rate at the ECB was raised nine times to 3.75 percent, the rate for overnight deposits only increased from 0.06 percent to 0.55 percent (end of June 2023).
“Savers look through the fingers”
“The banks are denying their own customers a risk-free, daily deposit at correspondingly high interest rates,” criticized Momentum economist Oliver Picek. “But that is exactly what they say about the European Central Bank itself. In this way they make a profit without any effort, but the savers overlook it.”
Source: Krone
I’m Ben Stock, a journalist and author at Today Times Live. I specialize in economic news and have been working in the news industry for over five years. My experience spans from local journalism to international business reporting. In my career I’ve had the opportunity to interview some of the world’s leading economists and financial experts, giving me an insight into global trends that is unique among journalists.
