The Hellenic Competition Commission (HCC), taking into account the structure of the domestic banking sector as well as the continued low interest rates offered by the Greek banks, compared to the Eurozone average, has initiated, by decision adopted on f 18.07.2024, a sector inquiry into the sector for deposit interest rates, exercising the respective powers conferred on it pursuant to Article 40 of Law 3959/2011.
The Authority's preliminary investigation in public sources lead to two main observations: first, the increased spread between the average deposit and lending interest rate (interest margin), (b) second, the low degree of pass-through of changes in the interest rates of the European Central Bank (ECB) to the domestic deposit market compared to the European average.
According to publicly available data, interest rate margins for both new and existing loans and deposits in Greece had increased by close to 60% over a period of approximately 2.5 years (from January 2021 to August 2023). Α gradual – albeit still slight – decline of interest rate spreads appears to have begun since May 2024.
In addition, from July 2022 to September 2023, the European Central Bank (ECB) gradually increased the deposit facility rate, after a fairly long period of zero and negative interest rates. Subsequently, these increases were partially passed on to the deposit rates offered by the Greek banks, however the pass-through was limited and slow in comparison both to other member states and to the domestic banking system’s past practice.
Through the sector inquiry, the HCC shall investigate the conditions of competition in the market for bank deposits, with a view to identifying possible distortions and to submitting proposals to promote competition in the market, to the benefit of depositors (households and businesses).
Sector Inquiry into Bank Deposits
Latest Updates
- 19.07.2024 - Launch of a public consultation – publication of an invitation to any interested party to submit written observations and comments (see Press Release here).
- 04-15.11.2024 - Questionnaires sent to undertakings operating in the sector concerned.
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Questions & Answers
- General Questions: Scope and Aims of the Sector Inquiry
In markets characterised by tight oligopolies, conditions favouring tacit collusion between competitors may arise. Specific parameters, such as high market transparency, homogeneity of products/services, etc., further intensify such occurrences. If a minimum level of concertation between competitors is not established, tacit collusion as such is not prohibited, as a company is free to monitor and adapt itself to its competitors’ commercial policy. However, even this type of coordination is liable to adversely affect consumers.
The HCC attaches particular importance to the proper functioning of competition in the financial sector as a key driver of Greek economic growth. In this context, it takes the initiative to launch a sector inquiry into bank deposits, availing itself of the relevant possibility provided for by law, to determine whether and to what extent competition between banks is effective and to identify the conditions that may favour concertation between banking institutions, having detrimental effects on consumer welfare.
As part of its sector inquiry into bank deposits, the HCC will mainly focus on the following aspects:
a) the competitive conditions prevailing in the banking sector, with emphasis being placed on bank deposits;
b) the reasons why depositors do not seem to switch to alternative providers other than the banks with which they already hold an account; and
c) to the reasons why banks do not seem to offer higher deposit interest rates.
The sector inquiry into bank deposits aims at helping the HCC get a comprehensive insight into the competitive conditions prevailing in the market concerned, in order to subsequently propose initiatives to promote specific competition policies or regulatory interventions. In that way, the sector inquiry into bank deposits is at the core of the HCC’s overall initiative to take steps to achieve the following goals:
- Restructuring of the Economy
- Promotion of Innovation
- Contribution to the country’s Digital Transformation
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Timeframe
- 18.07.2024 - Formal launch of the sector inquiry into Bank Deposits
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Communication with the sector inquiry team
You can contact the Bank-Deposits Sector Inquiry team by email to: This email address is being protected from spambots. You need JavaScript enabled to view it.
