Foreign banks attracting many Dutch savers with higher interest rates
Foreign banks are attracting more and more Dutch savers with higher interest rates on savings accounts. Banks from Estonia, Italy, Germany, France, and Slovakia, among others, have seen a sharp increase in Dutch customers since the European Central Bank scrapped negative interest in July, NOS reports.
The interest rate hike the ECB is expected to announce today will likely increase this trend.
Dutch banks slightly increased their interest rates on savings when the ECB scrapped negative interest in July. Rabobank now offers 0.1 percent interest on savings up to 100,000 euros and 1.5 percent on five years fixed term. ING and ABN Amro’s interest rates for savings up to 100,000 euros are both 0.0 percent and 1.1 percent for five years fixed.
But some foreign banks increased their interest rates more significantly, resulting in a difference of about 0.65 percent on regular savings accounts and up to 2 percent for fixed terms, according to NOS.
July’s interest rate decision “really accelerated things for us,” a spokesperson for Raisin, a German platform that many foreign banks use to operate in the Netherlands, said to NOS. “We are ready with popcorn for [today’s] decision.” The number of Dutch customers who approached a foreign bank via Raisin tripled in the past 12 months. “It involves a few thousand to tens of thousands.”
Bigbank, an Estonian bank active in the Netherlands since 2012, currently offers the highest interest rate in the Netherlands at 0.65 percent on regular savings and 2.85 percent on savings fixed for five years. The bank also welcomed significantly more Dutch customers in the past year. “The number of Dutch customers grew by 78 percent,” a spokesperson said to the broadcaster.
There are now more safeguards in place for putting your savings in a foreign bank than there were with the Icesave debacle. The Icelandic bank, which lured about 100,000 Dutch customers with relatively high interest rates, went bankrupt in October 2008 during the financial crisis. It took Dutch customers six years to get their savings back.
Since 2010, the central bank of each EU country must guarantee up to 100,000 euros for each account holder, called the deposit guarantee regulation. Foreign customers can also go to the central bank to get their savings back if their bank goes bankrupt. The central bank must refund the money within ten days.
But putting your savings in a foreign bank is still not without risks, according to NOS. Not every regulator is equally strict regarding banks’ health, and not every country sets aside the same amount of money in their guarantee funds. Dutch savers will also have to navigate foreign bureaucracy themselves to claim their savings back.
