2023-08-20 06:30:59
The star savings product in Spain is not going through its best time. The big banks, for now, have not wanted to enter the war for the remuneration of the capital after years of abundant liquidity by the European Central Bank.
Institutions are promoting other products such as mutual funds among their clients and are enjoying a sweet moment thanks to the rise in interest rates, which increases the interest margin, shoots up profits and makes mortgages more expensive. Besides, the growth of the economy and the good progress of employment removes the danger of the default rate increasing in the short term.
«Banks have no incentive to pay. If you see the level of loans on deposits there are, they have more deposits than loans, access to the market to finance themselves is still very good and they have no incentive to pay”, comments José Ramón Iturriaga, fund manager of Abante Advisors.
However, this has not always been the case. The last time interest rates in the eurozone reached 4% the big banks went as far as offering up to 11% interest on deposits. Openbank, the digital subsidiary of Banco Santander, offered this amount in the summer of 2007 and Bankinter up to 10%.
With all this, the deposits accumulate a patrimony of 983,000 million, according to the latest data from the Bank of Spain at the end of April. In the first four months of the year they lost 1.96%, as they ended the year with a record figure of 1,003,388 million. This amount represents the highest level recorded in the historical series published by the Bank of Spain since December 1989.
The slight flight of deposits is due, according to the experts, to the strategy of directing wealth to other products such as investment funds and gradually amortizing mortgages with an unrelenting Euribor: they stand at 4.11%, the highest since the end of 2008. In the first quarter, Banco Santander recognized a leak of 20,000 million in its deposits which it attributed to the fall in the funds of corporate companies.
«What we have seen in these results are deposit outflows that have gone in a very large percentage to re-pay mortgages in advancewhich is something very common in Spain when the interest rate rises, and another to off-balance sheet products of the same banking entities that enter through another line of the profit and loss account, which are the commissions”, remarks Iturriaga.
The commissions and the high profitability of the funds explain the commercial strategy of the banks when placing this product which has become one of the most attractive from a fiscal level. The assets of these financial products reach historic highs.
At the end of May, the funds again raised their volume of assets by 2,000 million (0.6%), allowing it to be above 328,000 million euros. In the year as a whole, the patrimony increases to 26,000 million euros compared to the end of 2022 (8.5%), according to the employers’ association Inverco.
“The more conservative profiles again registered increases in assets, thus continuing the trend recorded since the beginning of the year. Thus, in absolute terms, Fixed Income Funds, with an increase of 1,263 million, led the ranking of asset growth by category – 12,002 million euros per year – due exclusively to the inflows registered” comment from of Inverco.
The conservative saver finds in fixed income funds the remunerated alternative to deposits, while the bank does not need to allocate funds to capital raising. The few funds that pay are not a competition for the big bank that, for the moment, does not want to open the tap despite the pressure of the last days from the Government and regulators.
Spanish investment funds closed the first quarter of 2023 with a total of 16.3 million participants, which represents an increase of 200,000 people compared to the data at the end of the previous quarter, according to the statistics released by this on Monday the National Securities Market Commission (CNMV).
If all financial collective investment institutions (IIC) in Spain are taken into account, the number of shareholders rose by 181,000 people, due to the fall in shareholders in investment companies. For its part, investors in foreign IICs marketed in Spain rose by 183,000 people, up to a total of almost 6.6 million participants.
With respect to assets under management, in the national IICs, at the end of the first quarter, it stood at 347,787 million euros, 4.77% more than in the previous three months. Foreign entities raised their assets by 4.92%, up to 210,956 million euros.
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