ING Chief Says Rules Are Punishing Deposits, Banks’ Safest FundsMaud van Gaal
Global regulators seeking to make banks safer by ensuring they hold buffers against deposits are pushing lenders toward riskier sources of funding, undermining their own objectives, said ING Groep NV Chief Executive Officer Ralph Hamers.
“We’re going now in a territory where wholesale funding is going to be favored whereas that has shown to be the particularly vulnerable side of funding for banks,” Hamers, 48, said in an interview. “Whereas the savings side that has shown to be the more constant and consistent funding is a little bit penalized because of all the requirements.”
The credit squeeze that prompted the collapse of Lehman Brothers Holdings Inc. in the U.S. and the U.K.’s Northern Rock Plc led regulators to introduce liquidity measures that require banks to hold enough easy-to-sell assets. At the same time, the European Central Bank, seeking to revive the euro-area economy, has started charging banks for deposits, a cost some banks, including ING, are passing on to their larger customers.
“Pressure on savings interest is mounting because money is very cheap,” said Hamers, 48, who leads the largest Dutch financial-services company. “It’s a model shift which is not very consistent with how you want to make sure there is stability going forward.”
ING, which counts on retail and corporate deposits for about two-thirds of its funding, started to charge large financial clients for deposits from Nov. 1. It’s too soon to comment on whether the bank will also charge fees to large non-financial corporates, a spokesman said.
In the U.S., JPMorgan Chase & Co. has told some hedge-fund clients that they’ll have to take their deposits elsewhere or pay to keep the accounts, a person familiar with the matter said last week. Deutsche Bank AG has talked with some customers about possibly making changes to deposit accounts as costs rise, a person familiar with the firm’s plans said, adding that the discussions are continuing.
“This is what quantitative easing brings. Let’s face it, it makes wholesale funding much more rapidly cheaper than savings,” said Hamers.