Spain is a country where deposits are deeply rooted. Before the 2008 crisis, they were the most prominent product among savers, but then zero and negative interest rates arrived and banks stopped paying for them. The zero or almost zero wage situation continues to this day, and Spaniards are already looking for alternative formulas to get some economic return on their savings.
file data Bank of Spain Giving a good account of trend change. The financial supervisor has published deposit figures for February and the consistent picture is that households hold 986.2 billion euros in these products (checking accounts and term deposits), while companies accumulate 294.8 billion.
But the novelty is not in the static image, but rather in the comparison with respect to the previous months. So far this year, namely January and February, households and businesses have pulled out 41 thousand million euros of the deposits they hold compared to the end of 2022.
In January there was the largest withdrawal of deposits with 30,500 million less in the bank’s treasury. Households took in 13,100 million that month and businesses 17,400 million. Thus, this dynamic continued in February with savings outflows of 5,000 million in the case of households and 5,500 million in the case of firms.
This came a few weeks before the financial turmoil began. Silicon Valley bank fell first, dragging in others like Signature Bank and forcing support from others like First Republic Bank. Then, in Europe, it was Credit Suisse’s turn with the stock market crash and its subsequent sale to UBS under Swiss state supervision. These events are not included in the statistics yet because the numbers only go up until February, but what is expected is that the instability in these weeks will also have some impact on the March data.
Reasons for outflow of deposits
If the banking chaos had not yet occurred in February, what is behind this influx of deposits? Two reasons, as explained by the Bank of Spain in the presentation of its annual supervisory report. However, he revealed that at the moment they do not see extraordinary inflows of deposits resulting from the financial turmoil.
Yesterday, Tuesday, March 28, Mercedes Olano, Director General of Supervision, explained that the Spaniards use their savings to counteract the blow of inflation that affects the incomes of families and companies. However, there is a factor that has more weight in withdrawing money from banks.
Financial institutions have spent years without reimbursing deposits, whether they are term or checking accounts. This producer barely earned a wage until these months despite the hike in European Central Bank (ECB) benchmark interest rates. Customers keep going to their banks to demand that they be paid back for their deposits, but the bank follows a certain strategy to satisfy them: it refers them to investment funds.
The banking sector is promoting investment funds as an alternative to deposits in order to provide profitability to customers who demand them. Thus, according to the Bank of Spain, savings flow in accordance with deposit statistics.