Spanish banks have begun to reduce the profitability offered by their savings products in recent months following the new path of interest rates in EuropeThe first rate cut implemented by the European Central Bank (ECB) in June and the expected 25 basis point reduction that the monetary authority will carry out this week, according to the market, have left behind the best savings offers.
National entities are readjusting their savings remuneration offer, which reached its peak just before the summer. The weighted average rate on deposits now stands at 2.65%, according to the latest official figures from the Bank of Spain for the month of JuneHowever, the adjustment does not come at the same pace for all customers.
Compared to the traditional deposits that Spanish banks offer through their branches, Entities strive to maintain more aggressive offers, which still hover around 4% for their VIP clients, those who have a high net worth deposited in the entity.Although the best offers exceeded this level when interest rates peaked at the end of 2023 and the beginning of this year, they are now still in line with the official price of money.
There are several banks that design special offers for private banking clients, with a high amount of money in liquidity in the bank.even above the 100,000 euros (US$110,507) in savings, an amount that is above the coverage of the Deposit Guarantee Fund.
Tailor-made suits
The strategies for remunerating private banking clients vary depending on the entity. In private banking, this is not the case as in the commercial banking segment, where banks design standard offers for all clients, but varies depending on different parameters.
Private banking, especially those dependent on large commercial banks, are being very selective when it comes to remunerating their clients’ liquidity, Offering the best conditions based on the client’s assetsthe type of products they have contracted with the bank or the amounts to be paid.
Just take a look at the liquidity remuneration of the large Spanish Sicavs, where the largest Spanish fortunes still accumulate their wealthto observe that national banks pay the deposits of their largest clients with interest rates that are completely out of market range and without following a pattern.
On average, Spanish banks pay 3.7% over twelve months on the liquidity of the ten largest Spanish asset-backed companiesaccording to the information filed by these entities with the National Securities Market Commission (CNMV).
To cite an example, BBVA pays 3.91% for the liquidity that Alicia Koplowitz has parked in her Sicav Morinvest. Banco Santander offers 3.72% for the deposits of Alberto Palatchi, founder of Pronovias, in his vehicle Gesprisa. Bankinter pays 3.98% for the liquidity of Leopoldo del Pino in his Sicav, Swift Inversiones. And Banca March offers from 3.71% to 3.8% for the average profitability of the liquidity that the family that owns the bank has in its Sicavs..
Strategy
These numbers show that private banks are waging a trade war to increase their clients’ positions.despite the reductions in the price of money.
Ultimately, the ultimate goal of selective offerings in wealth management is the same as in commercial banking, Which is basically attracting new clients or increasing the liquidity positions of clients they already work with..
In any case, in private banking it is easier to compete for these balances, Because high net worth clients often work with several entities at the same time.meaning that clients who require a higher return on their liquidity and cannot find it in their reference entity do not need to open a new account in another bank, they only have to transfer the money.
