Spanish savers rush to govt. bonds as banks slow to lift deposit rates

The Bank of Spain started an appointments system on Tuesday to better manage the rush for short-term government debt from ordinary savers eager to benefit from a rate-hike fuelled surge in yields, resulting in long queues in the streets outside.

Demand among smaller investors, who held just 0.2% of total Spanish public debt in November, according to the Treasury, has increased in recent weeks as Spanish banks have been slow to raise deposit rates in line with the borrowing costs.

In 2022, Spain sold around 400 million euros of public debt through the webpage of the Treasury, 97% of it in short-term debt to retail investors, according to their data. In the last five weeks demand from retail savers had risen to 1.1 billion euros, with 700 million euros just in the last two weeks, the Treasury said. On Tuesday, the Spanish Treasury sold 5.06 billion euros ($5.4 billion) in six-month and twelve-month paper, with an average rate of 2.675% and 2.813%, respectively, from previously 2.584% and 2.983%. Spanish banks like Santander , BBVA and Caixabank have not yet increased deposit rates in the same proportion as they have on their variable mortgage loans, which have helped lenders to post record profits.

Spanish one-year bank deposits offered an interest of just 0.42% as of December, compared to an interest of 1.34% offered by banks in the euro zone, according to European Central Bank (ECB)data. Amid successive ECB rate hikes, queues began to form outside the Bank of Spain in central Madrid of retail investors looking to maximise their savings returns and to avoid the commissions required for buying public debt indirectly.

On Tuesday, the Bank of Spain responded by asking would-be investors not registered to buy bonds through the Treasury webpage to make an appointment to buy in person. Spain's Treasury said in a disclaimer on its website that an "exponential increase in requests" for public debt purchases and sales through the Treasury headquarters and the need to guarantee maximum levels of security and reliability were causing "a slowdown in the website's response times." ($1 = 0.9330 euros) (Reporting by Jesús Aguado; additional reporting by Emma Pinedo, editing by Aislinn Laing and Arun Koyyur)