Banks get rich on backs of customers

Greece’s banks have launched another attack on their own customers’ benefits after the European Central Bank chose to raise its interest rates. Late Friday afternoon they increased rates on loans while keeping deposit rates steady, raising only slightly the rates on time deposits. While European interest rates on deposits and loans rose slightly, in Greece the already wide discrepancy became even larger. It is this difference that explains the banks’ enormous profits (1.5 billion euros in the first half of the year), not to mention the many negative repercussions for the Greek economy, the drain on household spending power and the lack of incentives to further modernize the banking market, where profits are guaranteed because of the banks’ oligopolistic methods. Unfortunately, monitoring mechanisms that were supposed to help customers were invoked too late. Responsibility lies first of all with the Competition Commission and with Development Ministry services, which are also supposed to monitor the functioning of all sectors in the market. But it is the government which has overall responsibility. Although the state mechanism has proved inadequate, its supervisory powers have not been transferred to the Bank of Greece (as is the case in the rest of Europe). The Bank of Greece, however, also bears some of the blame because although it does not have formal powers, there are many ways in which it can put pressure on the banks. After the shock of the stock market slide, Greeks do not have many places to deposit their money. The government should both protect them and, as soon as possible, transfer supervisory powers to the central bank. It is outrageous that in difficult economic circumstances banks should be able to make fortunes at the expense of their own customers.