Italy’s competition watchdog urges banks to boost deposit rates

Italy’s competition authority on Tuesday urged banks to better reward depositors when rampant inflation is eroding the value of savings and higher rates are helping to lift profits for the industry.

“European Central Bank President Christine Lagarde has stressed that banks need to engage with their customers in order to increase remuneration on deposits and savings,” the head of Italy’s competition authority said.

Presenting the watchdog’s annual report on its activity for 2022, Roberto Rustichelli said Italy’s top 10 banks had seen profits soar by a fifth as they raised rates charged on loans, while deposit rates lagged.

The Italian banking association has repeatedly said that current accounts provide a number of services but should not be seen as a way to provide a return on savings, for which there are other investment tools.

Banks, for example, have been offering access to money market funds to customers who complained about the lack of remuneration on basic deposits.

Some banks, especially digital ones but lately also high street lenders such as Credit Agricole (EPA:CAGR) Italia, have been offering time deposits or fixed-term savings accounts.

UniCredit (LON:0RLS) Chief Executive Andrea Orcel said last week that every additional percentage point of higher official interest rates that got passed on to deposit rates entailed 120 million euro less in revenues for banks.