Major banks launch final offensive over state bond billions

A few days before all the money from last year's successful state bond is set to be released, most major banks are entering the fray to recover some of the billions. After ING Belgium, Belfius and KBC are now also launching term accounts with high interest rates.

Last year, over half a million people subscribed to a tax-advantaged, one-year state bond, investing a total of 21.896 billion euros. That money (plus an interest rate of net 2.81 per cent), which will be released next Wednesday, has sparked competition between various banks and investors trying to entice investors.

ING Belgium rocked the Belgian banking world early this week by unpacking a term account that offers savers a gross interest rate of 3.80 per cent over a year. Net, after deducting the withholding tax of 30 per cent, that gives a return of 2.66 per cent.

The counter-offensive was not long in coming. Belfius on Friday launched a one-year term account that gross also offers 3.80 per cent. It furthermore launched a new type of bond that gives savers 3.10 per cent gross interest after one year. KBC also entered the fray with a 13-month term bill yielding 3.80 per cent gross. Only BNP Paribas, the market leader in the Belgian savings market, is not readjusting its interest rate for the time being.

Competition is also raging among smaller banks. On Friday, Argenta and Keytrade Bank, among others, announced they will indeed raise the term account interest rates.

Next Tuesday, the interest rate of the new state bond will be announced. It will, however, not be able to match the term accounts offered by banks. A net interest rate of around 2 per cent is expected on the one-year bond, which is significantly lower than what the banks have on offer.

^{Headquarters of the ING Belgium banking group © BELGA PHOTO BENOIT DOPPAGNE}