For the last 15 years, at least, the biggest Finnish banks have stifled competition with help from the government that has strangely always claimed that they believe in open markets!
During that whole crazy period when the European Central Bank imposed negative interest rates on the financial markets, the Financial Supervision here and other market regulators allowed the banks to stop giving the benefit of negative interest rates to private individuals and other small borrowers. In other words, if a housing loan interest rate was agreed to be 0,5% margin over 6-month Euribor interest rate then the bank was entitled to send an invoice to the borrower for 0,5% margin without paying the negative interest to the borrower! Big company borrowers and bank borrowers naturally received such negative interest payments. This was a really bad way to pump unearned profits into banks, boosting bankers’ bonuses.
Now with positive interest rates not one of the big banks is paying the market rate for deposits – all three are paying just 0,5% or 1% for long term deposits when they can re-invest these smaller private deposits for 3,5% and 4% in the wholesale markets.
Should we rename deposit banks something like “despot’s banks”?
Again, the Financial Supervision and other market regulators appear to accept cartel-like behavior without flinching!
Where is competition? Where are the officials whose job it is to maintain fair and transparent markets?
It appears that they are either sleeping at the helm of a big ship (like our Prime Minister likes talking about) or they are perhaps a little too close to the banks. The latter is not surprising when inspecting the power of the banking lobby.
One big bank’s Lord of the Manor’s moustache noticeably switches and he raises a warning finger every time somebody talks about the need for competition in the banking sector here! In his world, nothing could be better than our closed banking system.
Illustration by Walter J. Enright for Harper’s Weekly, December 13, 1913