Saxo Bank chief calls for fair play on rate hikes

Consider this more than an op-ed — it’s a call to action, says CEO and founder of the Danish bank KIM FOURNAIS

IN THE labyrinthine world of banking and investing, where opacity tends to masquerade as tradition, some banks and brokers retain the benefits of central bank rate hikes rather than passing them on to their clients.

This practice, while not immediately visible, has significant implications, and it’s time some light was shed on it. Yes, the financial industry must make money — that’s true for Saxo, too — but the balance needs to be right. We need to nurture win-win relationships.

The interest rates offered by banks may seem like an esoteric concept. But what often goes unnoticed is that not all banks treat these rates in the same way. Some sharing the benefits with clients, but most follow a different path.

The banking playbook, after years of low interest rates, is to reap the benefits at the expense of clients. This is evident in quarterly results, where some even appear surprised at the profits reported — most as a direct result of central bank decision-making.

This has also brought the UK financial regulator to call on financial institutions to improve the deposit rates offered to consumers. MPs on the Treasury Select Committee have been pressing banks and building societies to give a better deal to savers as interest rates have risen.

European Central Bank
The European Central Bank (ECB) official deposit rate is 3.75 percent. Image by frimufilms on Freepik

It appears to be the same across the eurozone, where the average bank interest rate on instant-access deposit accounts for households is 0.23 percent, on an annualised basis.

The European Central Bank (ECB) official deposit rate is 3.75 percent.

Rising rates are supposed to curb inflation and aggregate demand, by making saving money and “cutting back” more attractive. The reality can be quite different.

The Bank of England emphasises how important it is that consumers understand how rate changes could impact their ability to pay while in Europe. The ECB acknowledges that it also works the other way around.

At Saxo, we refuse to accept the status quo. Our immediate rate-hike pass-on policy is a direct response to an industry landscape in which clients’ interests are not being fully served.

We recognise that the financial choices our clients make represent dreams, aspirations, and the pursuit of a better future. It’s our responsibility to ensure that these aspirations are met with timely and transparent actions, rather than a queue of delayed benefits.

Our policy is a commitment to the bank-customer relationship. We believe in win-win. I hope the industry will reflect on its priorities and embrace a philosophy with the values of trust, transparency, and client-centricity at its core.

Consider this more than an op-ed: it’s a call to action. Not just for the industry, but for investors and savers who should demand more.