Banks recover €2.5Bn in deposits

After losing around €6Bn in deposits since the start of the year, much of which was invested in government savings bonds that offered higher rates of interest, Portugal’s banks recovered family and personal savings of €2.5Bn in June and July.

It brings the total value of family and personal savings in Portuguese bank accounts to €176.2Bn, although the balance in terms of capital flight since the start of the year has yet to recover.
The banks clawed back €1.3Bn in July, which represented the second consecutive month in increased savings in bank account, according to data released this Monday by the Bank of Portugal.
Much of it was placed in fixed-term savings accounts which brought in €1Bn in July while cash on demand deposits rose by only €300 million. Despite the trend towards recovery, when compared with the like-for-like period in 2022, there was a shortfall of 3.4% in deposits.
In he first six months of the year families had withdrawn €8.8Bn because of the generous interest rates of 3.5% offered by savings bonds.
However, with or without pressure from the banks, the high interest rates came to an end when the new Series F certificates offering 2.5% replaced the Series E offering 3.5%.
“It is normal for deposits to recover in the second half in relation to savings bonds”, Filipe Grilo, an economist and lecturer at Porto Business School told the newspaper Negócios, adding that while bonds would remain at a fixed return of 2.5%, interest rates on deposits would grow. He also said that it was too early to judge if the return to deposits would continue since families often paid some of their holiday subsidies into savings accounts to create a hedge against inflation.