Thousands of deposit account holders seem to be looking for alternative options as the interest rates on deposits in Greece remain at extremely low levels, as evidenced by the continued rise in the interest rate spread on deposits and loans.
More specifically, in October 2023, the weighted average interest rate on outstanding amounts of deposits remained unchanged at 0.46%, while the corresponding rate on loans increased to 6.39%.
Therefore, the interest rate spread between outstanding amounts of deposits and loans increased to 5.93 percentage points.
Moreover, the weighted average interest rate on new deposits increased to 0.46%, while the corresponding rate on new loans remained almost unchanged at 6.17%.
In this category, the interest rate spread between new deposits and loans remained almost unchanged at 5.71 percentage points.
Greece, together with Cyprus and Slovenia, lag behind the other EU countries in terms of deposit interest rates.
Meanwhile, households and businesses’ deposits fell by 100 million euros in October, compared to an increase of 694 million euros the previous month, while the annual rate of change eased to 3.5% from 3.7% the previous month.
New trend
Given that there are no capital controls and that deposits are now checked, many of the deposit account holders transfer their money to other EU countries amid expectations of higher returns.
Others also prefer and choose to invest their money in bonds.
According to banking market sources, Greek banks have very large liquidity reserves, but also a very strong capital base so that they are not afraid of a reduction in deposits, unlike what is happening in many banks in the European North.
Therefore, it is considered highly unlikely that they will proceed with a significant increase in deposit rates soon, although at some point Europe-wide competition will start to affect them.
