The low interest rates on deposits, the high commissions for a number of banking services or transactions, as well as the slow pace in granting mortgage loans constitute the three levels of government intervention in banks. The aim, according to the statements of Prime Minister Kyriakos Mitsotakis, is “to make them realize that they must fulfill their debt to Greek society”.
At the top of the agenda are the deposit interest rates that are set in Greece at the lowest level among the countries of the eurozone with regard to term accounts.
Based on October data, the average interest rate on a term deposit was set at 1.84% compared to 2.76% which is the average interest rate in the Eurozone, with countries such as Italy holding the scepter of the highest returns with an interest rate of 3.69%. Another typical case is France, where the state intervenes by regulating interest rates on savings accounts in order to support small depositors. These are the so-called “livret” accounts, in which the maximum deposit amount is up to 30,000 euros and has an interest rate of 3%, while the interest is tax-free.
Commissions for a series of banking transactions and services, such as transfers, charges for issuing a debit card or bill payments, constitute the second level of intervention on the part of the government, as, according to statements by the Minister of National Economy and Finance, Kostis Hatzidakis, they cause the “justified irritation of many citizens.”
Today, the cost of a typical transfer for individuals via web or mobile banking starts at €1 for amounts up to €1,000 and reaches up to €25 for larger amounts in countries within the EU, while the cost even soars to €350 for large amounts if the transaction is made at a bank branch.
A solution to the issue of fees imposed by banks for transfers, i.e. the transfer of money from account to account, is provided by the implementation of the European regulation from the beginning of the new year, which obliges them to equate the commission they charge for a simple transfer with the commission for direct payments, such as e.g. the transfer of money via IRIS. Given that today money transfers via IRIS are free for amounts up to €500 per day, banks will be forced to adjust their tariffs downwards, while for larger amounts the issue cannot be ruled out being regulated through government intervention, setting a maximum charge limit – e.g. for money transfers up to €1,000.
Illustrating interest in the issue of transaction fees is the decision of the Bank of Greece to publish on its website, from January 7, data on:
- Fees, commissions and service fees associated with payment accounts, such as cash withdrawals from ATMs (of the same or a third-party provider) with a debit card and for amounts of 50, 200 and up to 600 euros.
- Fees for money transfers through a bank branch, via internet and mobile banking, as well as outgoing transfers for amounts of €1,000, €5,000 and €15,000.
- Deposit interest rates.
- Interest rates for housing and consumer loans, including credit cards, as well as the commissions and expenses charged for these credits.
Another key issue from the government’s perspective is also mortgage loans, both in terms of granting and disbursement times and in terms of the costs associated with a housing loan.
The implementation from the beginning of 2025 of the Bank of Greece’s decision that raises the loan limit to 90% of the property value when it comes to new buyers, will make it easier for banks to “relax” the criteria in the framework and subsidies through the “My Home 2” program, which is expected to start in the first quarter of the new year.
The banks also seem willing to continue the special offers they launched in mid-2024 for free file examination costs, legal technical inspection, which total close to €800-€1,000, while the reduction in interest rates by the ECB will also support the reduction in the cost of servicing a housing loan.
The government intends to request the faster sale of housing that comes into the possession of banks and funds through auctions, an issue that seems to conflict with the time-consuming procedures required to legalize properties with irregularities.