Eastern Europe Banking & Deposits: Estonia – ECB statistics show that average interest rates on new household deposits in Estonia are the lowest in the eurozone

On 14 January the Estonian newssite Postimees reported that the latest statistics published by the European Central Bank reveal that banks in

Estonia

are offering the lowest interest rates in the entire eurozone for household deposits of maturity up to one year.

The monthly statistics released by the ECB on 8 January, which cover November 2012, include only the 18 “eurozone” countries, i.e., the “third EMU stage” countries, and hence exclude both

Montenegro

and Kosovo.* On new household deposits with agreed maturity of up to one year, the highest average annual interest rates in the eurozone were those in Greece (4.59%), Cyprus (4.47%), and Spain (3.00%), while the lowest were those in Estonia (0.37%), Luxembourg (0.39%), and Austria (0.89%), and the average for the entire eurozone was 2.73%. On new deposits from non-financial corporations with agreed maturity up to one year, the highest average annual rates were in

Cyprus

(4.21%),

Greece

(4.20%), and

Spain

(2.08%), while the lowest were in

Luxembourg

(0.12%), the

Netherlands

(0.16%), and

Germany

(0.20%), and the average for the eurozone was 1.04%.

Experts spoken to by Postimees explained that the particularly low average rates for new household deposits in

Estonia

would be due to the fact that household time deposits in

Estonia

typically have maturities of just two to three months, while in other eurozone countries the average maturity is one year. In addition, Mr. Erki Kilu, CEO of the commercial bank LHV Pank, noted to Postimees that because the average loan-to-deposit ratio in

Estonia

has declined – from 175% in 2008 to 114% today – banks feel less need to offer high interest rates to attract deposits.

*The ECB deposit statistics lack data for eurozone members

Italy

(data on deposits from non-financial corporations) and

Ireland

(data on deposits from both households and non-financial corporations).

Sources:

Ebavõrdsus: Eesti hoiuste intressimäärad on euroala madalaimad (2013-01-14 08:40)

ECB statistics – Deposits from households: Euro area and national MFI interest rates (MIR)1): 1.1.1.2. With agreed maturity up to 1 year

ECB statistics – Deposits from non-financial corporations: Euro area and national MFI interest rates (MIR)1): 1.1.2.2. With agreed maturity up to 1 year

ECB press release: Statistical press release: MFI interest rate statistics (2013-01-08)