BUSINESS

Time deposit interest next to negative

EVGENIA TZORTZI

TAGS: Banking, Economy

Time deposits at Greek banks endured another decline in interest rates at the beginning of the year, with a slump in the average from 0.3-0.4 percent at the end of 2019 to just 0.2 percent.

A downward course has also been recorded in the guaranteed yields of alternative investments such as fixed-period guaranteed interest insurance products, as insurance companies have been increasingly scrapping such programs in order to turn their clients to purely investment products, known as unit-linked insurance plans.

The new interest environment in Greece this year renders the returns of time deposits practically negative, considering that the annual consumer price index comes to 0.5 percent, and time deposits have a 15 percent tax slapped on them.

That trend also serves to explain the reduction in time deposits to 43.6 billion euros in November from 44.5 billion a year earlier, in spite of the steady increase in total bank deposits over the same period.

Bank officials explain that the small differences recorded among the time deposit interest rates of various banks do not constitute a substantial differentiation, with the focus shifting instead to analyzing the needs and potential of each client.

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