BANKS in Spain have been told to start paying clients better rates for their savings as interest rates continue to climb.

The call has come from Economy Minister, Nadia Calvino, speaking at an event on Monday organised in Santander by the BBVA bank.

Banks have cashed in with increased profit margins due to the European Central Bank tightening its monetary policy and lifting interest rates to 3.5%- the highest in over 20 years.

Most banks though have not passed on the full benefit of rate rises to customers who have deposit accounts.

Nadio Calvino said: “I have no doubt that the Spanish banking sector has to start transmitting the rise in interest rates for the benefit of customers and Spanish citizens.”

BBVA Chairman, Carlos Torres, said excess liquidity in the financial system is the reason why banks aren’t paying up, though the situation could change once liquidity starts to dry up.

“Those of us who have excess liquidity aren’t paying for deposits,” he said.

“Instead, banks are offering other products such as fixed income mutual funds or savings accounts, Torres added.

Smaller banks are taking advantage of their bigger rivals not offering better deals with operators like ING marketing a three-month deposit offering a 2.5% return on €100,000 of new savings.

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