Interest rates: Are banks filling their pockets? – Business

That’s typical again: From this Wednesday onwards, the European Central Bank (ECB) is demanding banks no more negative interest if they park money with her for a short time. And how many banks have already announced that they will no longer charge their customers negative interest rates? Just 52 out of around 455 credit institutions, as determined by the finance portal Verivox. This raises the suspicion that the banks are passing on a burden to their customers that they no longer have themselves.

On the other hand, interest rates for mortgage loans have shot up in recent weeks like never before, from less than one percent for a ten-year fixed interest rate to more than three percent. The interest that banks charge customers for loans has literally exploded, the interest that they pay customers for their deposits stays pretty low – that seems to confirm all the prejudices about banks: they are apparently using the turnaround in interest rates caused by the ECBto fill your pockets.

It is therefore time to do something to relieve the German banks and savings banks to say: It is not as clear as it seems at first glance. One should be careful not to say that they rip off their customers. At the same time, it is time to criticize the banks and savings banks, but for a different reason.

Regarding negative interest: It is too early to condemn credit institutions for not having adjusted their conditions yet. Many do that these days, many always change their terms and conditions at the beginning of the month. It will be exciting on August 1st: Banks will still accept deposits from customers negative interest calculate, act perfidiously and should be publicly scourged.

One should rather criticize banks and savings banks for their whining about the ECB

Regarding mortgage interest rates: It is true that the Interest charges for customers have increased rapidly, significantly faster than on the capital market. However, one must take into account that banks must also factor in the increased risk in the interest rates for new customers; the default of mortgage lending has become more likely with higher interest rates. They also have to compensate for the fact that they will continue to receive low interest rates from many customers for a long time, but will now be able to refinance themselves at higher interest rates. It doesn’t look like banks are lining their pockets.

Regarding the interest margin in general: It is not inadmissible for banks to set the credit interest higher than the debit interest. Every merchant does that, no one sells a product cheaper than he buys it himself. It is also not inadmissible that the interest margin is larger when interest rates are higher than when they are low. Banks have to make a living from something. Ideally, they pursue a reasonable business model that does not unduly disadvantage customers. If you compare German banks with British or American banks, customers are still doing well.

What one can criticize the German banks for is their whining and complaining in recent years. With their constant criticism of the ECB’s low interest rate policy, they gave the impression that there was a simple solution. As if the central bank only had to raise interest rates and everything would be fine. The ECB has kept interest rates low because otherwise the euro would have blown apart and the economy would have crashed. It has also kept the risks for the banks low – for big banks the risk that Italian government bonds default, for savings banks and Volksbanken the risk that corporate loans default. In addition, the ECB has eased the burden of negative interest rates for banks with tax exemptions and other simplifications. Recently, these were hardly a burden on the balance sheets, despite all the whining.

The ECB is not raising interest rates now because it is giving in to the complaints of the German banks, but because it is trying to get high inflation under control. The danger is that by doing so, it is raising the risks that it has kept in check with low interest rates. Savings banks and Volksbanks are already whining again that the ECB must be careful not to stall the economy. As if there was an easy fix for that.