The governor of Banco de Portugal (BDP) criticized banks on Wednesday for low interest rates paid in client deposits, in his intervention at the Forum Banca Conference in Lisbon.
“It is not very understandable that there is a significant difference between the compensation of banking deposits in the Central Bank and the remuneration of deposits that the bank makes to its customers,” said Mario Centeno, who made the final intervention of the Banking Forum on Wednesday.
The bank’s activity to receive deposits “is attributed by us, by the country,” recalled the governor, adding that it is a “social responsibility to manage the savings of the Portuguese” and respect this social contract also in the remuneration of deposits.
“Today we can require the bank to support the economy, that the bank reflects on the income that gives the Portuguese savings what is also the compensation that the bank obtains in the central banks for the deposits it has there,” said Centeno.
Of the money customers deposit in banks, the party that banks do not lend in credit deposit the central banks.
Currently, the ECB deposit interest rate is 2.5%, which is the interest that banks receive for the money they deposit there.
The average interest rate of new private deposits decreased in January for the 13th consecutive month to 1.98%, according to data from Banco de Portugal.
The issue of deposits interest was discussed on Wednesday on the panel of bankers in the banking forum, which considered that the remuneration of deposits is mainly a matter of competition, demand and supply.
Mário Centeno (former Minister of Finance of Governments PS, António Costa) ends his term as governor of Banco de Portugal in July this year. The political crisis and new legislative elections may lead to delaying the governor’s reappointment or replacement, as he is appointed by the government but has to go through auditions in Parliament before taking office.
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