Banks in Cyprus are expected to start raising deposit rates, even if only gradually, in a bid to reduce a disparity between low deposit rates and increased loan costs.
This is what Philenews reported on Monday, adding that data released last week by the European Central Band (ECB), with February as the reference month, show Cypriot depositors to still being among the euro zone’s most disadvantaged.
And that they are a long way to go before catching up with the euro area average.
For example, the average household term deposit up to 1 year in the EU yields an average interest rate of 1.85% but only 0.59% in Cyprus.
The countries competing with Cyprus in low deposit rates are Portugal with 0.56%, Slovenia with 0.36% and Spain with 0.71%.
The banking systems that reward household deposits are Belgium which offers an average interest rate of 2.26%, followed by Germany with 1.95%, Estonia with 2.05% and Ireland with 1.07%.
Then follows Greece with 1.03%, France with 2.58%, Italy with 2.95%, Latvia with 1.73%, Lithuania with 1.27%, Luxembourg with 2.10%, Malta with 1.42%, Netherlands with 2.12%, Slovakia with 2.30% and Finland with 2.21%.
Banks in Cyprus have recently been under pressure from both the government and the Central Bank to reduce their spread sheet and raise deposit rates instead.
And this is going to happen soon, according to bank management insiders.