Cyprus borrowers association decries low deposit rates

The Association for the Protection of Borrowers (Syprodat) this week said that Cypriot banks have persisted with low deposit rates despite the ECB recently hiking the interest rate by 0.5 per cent, a move which saw banks in other EU countries increase their own deposit rates.

“Banks in Cyprus have stuck to their traditional approach of profiting at the expense of their customers,” the association said.

According to Syprodat, major Eurozone banks’ deposit rates vary between 2.5 and 2.6 per cent for a period of one month, 2.6 per cent and 2.7 per cent for a period of three months, and 2.75 per cent to 2.85 per cent for a period of six months,

At the same time, the association explained, Cypriot banks are following an upward trend in terms of interest rates on loans and other credit facilities they grant to customers, charging between 3.50 per cent and 6.50 per cent.

In this context, the association described Finance Minister Makis Keravnos’ recommendation that banks reduce their lending rates and charges, combined with an increase to their deposit rates as “apt and in all respects imperative”.

The association also noted that while Cypriot banks maintain deposits with the ECB through the Central Bank of Cyprus (CBC), as they are obliged to do, and while at the moment they collect the deposit rate given by the ECB, they themselves do not increase the deposit interest rates.

“We note that during the period of the negative interest rate, when banks paid deposit interest, the same thing happened to their depositors, meaning they were charged for maintaining the account,” Syprodat said.

“But now that the banks are collecting interest, there is no corresponding measure for depositors”, it added.

The association went on to say that “this can be considered a mistreatment of Cypriot depositors, especially small and medium-sized ones, who do not have access to foreign banks”.