ECONOMY

Bank deposits head south, along with interest rates

bank-deposits-head-south-along-with-interest-rates

The course of the country’s time deposit interest rates remains southbound, averaging at 0.8 percent on an annual basis, and following the downward trend across Europe.

Estimates suggest that deposits in Greek banks declined by about 1 billion euros last month, the main reasons being the decline in households’ disposable incomes due to increased tax obligations and the fall in the cash flow of enterprises.

Deposits are estimated to have added up to some 121 billion euros in February, against 122.2 billion in January. Of that, 102.3 billion concerned household deposits, breaking down into 41.9 billion in time deposits and 51.1 billion in savings accounts. Time deposits have seen their rates fall to 0.8 percent even for balances of 100,000 euros, while rates in the rest of the eurozone are even lower. Official data show that January was the only month to see a rise in time deposits in the last year, amounting to 1 billion euros.

Bank officials estimate that the next rate reduction cycle will come with the completion of the country’s bailout review, as that will allow lenders to reduce their dependence on emergency liquidity assistance (ELA) from the Bank of Greece, which comes at an average interest rate of 1.5 percent.