Deposits over 100 thousand euros are shrinking

The overall amount of deposits made in Portuguese banks is increasing, although there is less money on the wealthiest bank accounts. The instability taking place in the banking sector seems to be leading the Portuguese to withdraw money from their bank accounts over 100 thousand euros.

According to the most recent data from the Deposit Guarantee Fund (Fundo de Garantia de Depósitos – FGD), quoted by Portuguese newspaper Público, the accounts over 100 thousand euros were worth 58,096 million euros in June last year, 3,395 million (or 5.5%) euros less than the homologous period in 2014. These accounts correspond to 1.3% depositors – thus, a small minority.

This withdrawal of capital demonstrates depositors’ insecurities, since the amount of money surpassing 100 thousand euros is not safeguarded in case the State intervenes in banking, and the sector has been having some difficulties. Being these data from June 2015, they still do not cover public authorities’ intervention on the Portuguese bank Banif, in December. And the law allowing, in case of intervention in a bank, the implication of part of these deposits – over 100 thousand euros – was still six months from coming into effect.

A “completely understandable” decrease

João César das Neves, economist and professor, states this decrease in deposits over 100 thousand euros and in the amounts uncovered by deposits’ guarantee is “completely understandable”. The economist told Público: “the existence of a safety limit naturally creates an additional risk above that level and an incentive to restructuring deposits for inferior levels”.

On the other hand, Ricardo Cabral, also economist and professor, says the data brought forward by the Fund appear to show that people “withdraw part of that money from the Portuguese banking, taking them to the foreign banking or applying them differently”, for example on real estate. The economist says dividends can exist due to “those deposits from other banks and/or from other account owners” – that way, the money is covered for.

Ricardo Cabral says, additionally, it is “likely the instability around the Portuguese banking in 2014”, with the resolution of the Portuguese bank BES, “and the perspective that the authority of the banking resolution should come from the Bank of Portugal and the ECB starting from January 2016, has led some Portuguese depositors to follow that strategy”.