ECONOMY

Fight begins against high deposit interest rates

The commissioners appointed to the country’s four systemic lenders – National, Alpha, Eurobank and Piraeus – will find one of their biggest challenges in the cost of attracting deposits.

The reduction of interest rates on time deposits is among the top priorities set to the local credit system for the next few months, under threat of drastic measures in case of non-compliance. Although the banking sector is currently staying afloat thanks to the bailout tranche, and despite warnings regarding the exceptionally high cost of money, Greek rates continue to lead the way in the eurozone, averaging at 5 percent.

The precedent set by the central bank of Spain, which imposed a ceiling on bank rates, is seen as a desperate, though not unlikely solution to reducing the cost of drawing cash.

The issue has repeatedly been the focus of the Bank of Greece as well as of the country’s creditors but all efforts made to date have failed, as deposits even as low as 10,000 euros enjoy rates of about 4 to 5 percent. The problem has shifted from the competition among banks to that among branches, connected with the continuing merger process, as their managers hope that good performance will save branches from closure.