The Hellenic Competition Commission identifies four significant distortions in the functioning of the banking deposit market in its interim report released today. At the same time, it puts forward four specific proposals to strengthen competition, thereby opening a public dialogue with the government and the relevant authorities.

As the Commission emphasizes, despite successive interest rate increases by the European Central Bank (ECB) in recent years, the Greek market has not passed these changes on to depositors to the same extent as other euro area countries. This partly explains the persistently low deposit interest rates.

The distortions

At the heart of the findings is the structure of the market, which remains highly concentrated in the hands of a few banks, resulting in limited competitive pressure. This, combined with high barriers to entry for new players, reduces incentives to offer more attractive returns to households and businesses.

At the same time, the Commission notes that the transmission of monetary policy decisions to deposit products occurs with a clear time lag and with less intensity than expected, depriving depositors of any substantial benefit.

Another factor reinforcing these distortions is low customer mobility. According to the report, most depositors continue to remain with their bank even when more competitive options are available. This inertia sustains the existing regime and allows systemic banks to keep deposit rates low without risking a loss of market share. At the same time, the high opportunity cost leads many savers to turn to alternative forms of investment, affecting liquidity and the overall dynamics of deposits.

Proposals

In response to these distortions, the Commission puts forward a series of proposals aimed at strengthening competition, either by empowering smaller banks and alternative providers or by facilitating new market entry. Specifically, it proposes:

• Strengthening competition through new entries and expansions (e.g. Attica/Credia Bank, cooperative banks, Viva Bank), with the aim of exerting pressure for higher interest rates.

• Creating state-backed savings accounts similar to the Livret A/LEP (French model), with a state-determined interest rate, as a complementary tool for financing the state budget and enhancing returns for small depositors—subject to an assessment of feasibility and fiscal effectiveness.

• Developing genuine savings products (e.g. fidelity premium schemes as in Belgium) that reward the long-term holding of funds with preferential interest rates, offering a balance between returns and flexibility compared to the current situation.

• Increasing depositor mobility through better information and interest rate comparison tools (Bank of Greece publications, comparison websites), simplification and promotion of “provider switching,” possible extension to businesses, and in the longer term, exploring account number portability at the European level.

The Commission is now opening a broader dialogue on the changes required for the Greek deposit market to function more competitively and deliver higher returns. The final report, to be issued following public consultation, is expected to define more clearly the measures that can be adopted to address the structural weaknesses of a market that continues to operate below the European average.