Frankfurt A few weeks after the interest rate hike by the European Central Bank (ECB), ING in Germany started the fight for customers’ savings deposits. From December 6, the interest rate for call money is to rise to 0.3 percent, announced ING Germany boss Nick Jue on Thursday in Frankfurt. Interest rates for fixed-term deposits are to be raised immediately by 0.3 to 0.5 percentage points.
The ING is not the first institute to offer interest on call money again. But it is by far the largest money house. At the end of last year, the institute had almost 9.1 million private customers. The bank currently runs a total of around 7.5 million call money accounts
Deutsche Pfandbriefbank currently offers new and existing customers 0.75 percent per year, Renault Bank Direkt offers new customers 0.75 percent and existing customers 0.6 percent. However, these institutes are niche providers.
ING: Other banks could also raise call money rates
Due to the size of ING, its announcement should have a signal effect for the German banking industry. “Our overnight rates are here to stay,” Jue said.
Other banks are already positioning themselves. Lars Stoy, head of Deutsche Bank’s German private customer business, said in the “FAZ” that the bank “began to increase the interest rates on deposits for our customers a few weeks ago”. “I assume that further steps will follow in the coming year, both at Deutsche Bank and at Postbank.” The call money rate for the Deutsche Bank and Postbank brands is currently 0.001 percent.
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Commerzbank boss Manfred Knof had recently expressed himself more cautiously. “In retail banking, it’s important that nobody in the German banking system pays anything on current accounts,” he said at a Bank of America finance conference two weeks ago.
ING wants to ensure growth with interest rate offensive
For many years, Commerzbank has advertised large welcome payments to attract new private customers. However, Knof, who has been in office since the beginning of 2021, wants to pay less attention to growth and more to profitability. The institute therefore currently does not pay any interest on current accounts to private customers. According to Knof, the bank does not want to be a pioneer on this topic, but deliberately a latecomer, a “late follower”.
>> Find attractive interest rates: Click here for the overnight money comparison calculator and the fixed deposit comparison calculator
ING Germany is completely different. CEO Jue made it clear that he wants to boost the bank’s growth with his interest rate offensive. “We are falling back into old strengths. Customer growth through the deposit business is one of our strengths,” said Jue. “We’ll jump back in there.”
In particular, the bank is courting new customers. New customers should even receive one percent interest for newly opened call money accounts in the next four months up to a limit of 50,000 euros.
Until recently, mostly negative interest on call money
A drastic reversal has thus taken place on the deposit market. Until a few months ago, numerous financial institutions charged negative interest, so-called custody fees, for customers with large savings deposits. In mid-August, the consumer portal Biallo reported that 35 banks would still show a custody fee in their price list or on their website. At the end of May, however, 582 financial institutions were still charging negative interest. At that time, the comparison portal Verivox even counted almost 100 banks with a price display with negative interest.
>>Read here: Negative interest rates for private customers are disappearing – which is in store for savers
Not all German financial institutions have customers who still have savings. At the 360 savings banks nationwide, customer deposits had only increased by around 600 million euros in the first half of 2022. In Germany, the savings banks are market leaders in business with private customers.
Deposits from private customers of ING have been growing since May
According to savings bank president Helmut Schleweis, in the future 60 percent of German households could no longer cover their expenses with their monthly income and could slide into the red. The co-head of the cooperative DZ Bank, Cornelius Riese, also warned at a Handelsblatt conference: “Disposable household income will fall. The number of people who can save will decrease.”
ING customers seem to be less affected: According to Jue, deposits at ING have been growing month by month since May. In May, ING announced that it would no longer charge custody fees from June.
There also seems to be use for additional deposits: although ING Germany is observing declining growth rates in construction financing, business with construction loans is still growing.
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