The Dutch central bank DNB has warned banks that they need to raise interest rates on savings or risk losing customers to competitors in other European countries.
The European Central Bank raised its base rate on deposit savings to 4% in September, but none of the four major banks in the Netherlands offers more than 1.7% on a standard savings account.
De Nederlandsche Bank said banks that made a collective net profit of €10.5 billion in the first half of 2023 risked a public backlash if they failed to pass on the benefit to account holders.
Only 1.6% of the money held by Dutch savers was currently lodged in foreign accounts, but DNB warned this trend could grow unless banks took action.
“Although savers have been loyal to their banks so far, the rising profits of banks have gone hand in hand with social discontent over the level of savings interest,” the central bank said in its annual report Supervision in Focus.
“The desire to obtain a better return on savings could encourage savers to transfer to other (foreign) banks that offer a better interest rate on savings, or to hold their balance in other forms.”
The four biggest banks in the Netherlands also earned around €300 million from charges to customers for holding accounts or on transactions, DNB calculated.
The four banks – ING, ABN Amro, Rabobank and Volksbank – have a total market share of around 80%, making the sector less competitive than in other European countries.
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