Lack of competition between big banks keeps savings rates low
There is too little competition between Belgium's big banks, according to an audit by the country's Competition Authority (BMA). As a result, their savings rates are "historically and consistently" lower than those of other banks.
The dominance of Belgium's big banks - Belfius, BNP Paribas Fortis, ING and KBC - is so great that the BMA report speaks of an oligopoly. "This means that the players are likely to be able to easily observe the behaviour of their competitors and follow a similar course that reflects their common interests," the report says.
The lack of competition can be detrimental to customers. According to the BMA, the average return on savings in the four big banks is "historically and consistently" lower than the return on savings in other banks.
"The report confirms our suspicions," said Economy and Employment minister Pierre-Yves Dermagne of French-speaking socialist party PS, who commissioned the study. "The big Belgian banks are riding in a peloton, to use a cycling metaphor. It is clear that there is not enough competition."
Policymakers now want to increase competition in the sector. The report recommends that banks move away from unclear base rates and loyalty bonuses. Consumers should also be able to better compare banks and their products through independent organisations, and the BMA advocates making the IBAN account number transferable when switching banks.
The head office of ING Belgium in Brussels © BELGA PHOTO HATIM KAGHAT