Bigbank deposits exceed 1 billion euros
At the end of March, Bigbank, an Estonian bank with international reach, exceeded a significant threshold: for the first time, the bank holds deposits worth over one billion euros, from eight European countries.
According to Martin Länts, Chairman of the Management Board of Bigbank, the growth in the volume of deposits has been driven by the rapid growth in Bigbank's business volumes in recent years, i.e., the volume of loans issued and the increase in the bank's balance sheet. "Last year, we exceeded the one billion mark in terms of balance sheet size; this year, we hit the same mark in loans and now also in deposits. As a bank specialising in loans, we consider reliability and a broad international depositor base, which includes both individuals and companies, to be an important factor in the sustainability of the financing of our business," Länts commented the bank's rapid growth. Bigbank currently accepts deposits in eight countries: Estonia, Latvia, Finland, Sweden, Austria, Germany, the Netherlands and Bulgaria.
In March, Bigbank decided to raise the interest rates on term deposits in Estonia to the highest level in the market. Bigbank is now paying 2% for annual deposits, with interest already at 3% for maximum period deposits. "Interest on term deposits must be considered in their context. In turbulent times and difficult market conditions, the 100% guarantee offered by the National Guarantee Fund for deposits of up to 100,000 euros is an important consideration. This guarantee is a fundamental difference between banks proper and savings-oriented savings and loan associations," Länts pointed out.
Since Bigbank is also interested in entering the regular banking market in the long run, increasing the local deposit portfolio is, according to Länts, a strategic step towards increasing the number of customers. “The interest rate of 1-2% offered by smaller banks for term deposits is, considering their risk-free nature, a couple percent better than nothing. If your usual bank does not offer these rates, you would do well to check with their competitors,” Länts recommends, to ensure that the level of competition already present in the housing loan market also reaches the savings market.
According to the Bank of Estonia's statistics for March, Estonian residents have more savings than ever; at the same time, this money is increasingly held in regular bank accounts offering essentially no interest. For example, the volume of household deposits in Estonia grew by 15.7% over the past year, having reached 12.7 billion euros. Meanwhile, the average interest rate of term deposits in Estonian banks was only 0.53%. Customers of the market leaders Swedbank and SEB receive 0% interest on funds held in current accounts as well as fixed-term deposits, which means that the banks have the money at their disposal free of charge.
Bigbank is an Estonian commercial bank specialising in loans, whose balance sheet total exceeded one billion euros in 2021.