ECONOMY

Banks profit from widening rate spreads

The gap between deposit and loan interest rates keeps increasing at the expense of consumers, while it is mostly shrinking in other European Union member states. As the latest rate hike on August 3 by the European Central Bank showed, Greek retail banks never miss a chance to adjust their rates in order to boost their profit margins. Thus, the spread between deposit/savings and loan rates is triple the size of the spread in the EU (see table). Most Greek banks, in fact, left their rates for savings and deposit accounts unchanged, limiting their hikes to time deposits and those accounts linked to financial products. Banks, for their part, claim that Greece’s relatively high inflation – almost double the eurozone average – is to blame for the higher spreads. They add that operational costs and large write-offs also play a role. But, they claim, eventually the spreads will converge. When asked about deposit rates that are lower than the inflation rate, bankers counter that they are not required to cover a client’s losses from high inflation, a condition that, they say, is not their problem anyway.