Savings certificates continue to “shrink” after the interest rate cut | Savings

In February, new subscriptions to Savings Certificates (CA) once again fell below the amounts redeemed, which led to the total balance reducing by 26 million euros, to 34,016 million euros, according to data released in this Monday by Banco de Portugal.

This worsens the trend of reducing applications in this savings instrument, which has been occurring since the end of 2023, and which is also happening in Treasury Certificates (CT), which lost 143 million euros, reducing the amount invested in this product at 10,691 million euros.

The total of the two savings instruments amounted to 44,707 million euros, 160 million euros less than in January.

According to data released last week by IGCP, the agency that manages public debt, CA purchases in the second month of the year amounted to 206 million euros, while redemptions amounted to 233 million euros.

In CT, purchases remain low, amounting to two million euros in the same month, much less than the 146 million euros in redemptions.

The cut in remuneration for CAs, in June 2023, and for CTs several years ago, explains savers’ lower appetite for public savings products which, among other advantages, are exempt from paying commissions.

The reduction in remuneration for the product is criticized by the president of CTT, an entity that has practically had exclusive rights to resell the product. In an interview with Business Journal and the Antenna 1João Bento argues that “there are two things that the Treasury could do. One is to raise the limit per account, which is 50 thousand euros, and the other is to look at profitability, which has lost competitiveness and now it was necessary to regain it“.

In the interview, the manager also admitted that “what is approved in the State Budget [a captação de 3,5 mil milhões de euros em 2024] is incompatible with current placement levels”, although it admits an increase in subscriptions in the second half of the year.

The change in CA coincided with the increase in profitability, associated with the three-month Euribor rate, which was generating an outflow of amounts invested in bank deposits for the State product. With this decision, the maximum base rate fell from 3.5% in series E to just 2.5% in series F, the only one that accepts new subscriptions.

That change is more profound than it might seem, since one percentage point was no longer added to the average Euribor value for the month prior to subscription, as was the case in the previous series. It follows that a possible drop in Euribor, which continues to be its base, to a value below 2.5% will result in an even lower remuneration.

As in the previous series, there are retention bonuses that are added to the base rate, but they also decreased, becoming 0.25 percentage points between the second and fifth years, and reaching 1.75 points in the last two years of the year. subscription term.

The subscription period was extended, from ten to 15 years, and the maximum subscription amount per saver fell from 250 thousand euros to 50 thousand euros.

Greater competition in placement

With the launch of Series F, the possibility of selling CA, until now exclusive to CTT, and the State, was extended to banks and other financial institutions through the subscription service online of the IGCP itself and some Citizen Spaces.

And making its debut in this expansion is Banco BIG, which has made the product available since March 14th.

Caixa Geral de Depósitos also expressed interest in this option, but has not yet implemented it.