Banks encouraged to help stimulate economy
The banking system needs to cooperate in helping to re-launch the economy in return for the help they were given at the height of the financial crisis, said Flemish minister-president Kris Peeters last week during a gathering of Voka, the Flemish chamber of commerce. Peeters now plans to bring the banks into discussions on how they might go about the task.
More leniency in extending credit and investment in social programmes proposed
The call came as figures from the National Bank revealed that Belgians have €229 billion in savings accounts – €10 billion more than last year. This is despite continuing low interest rates – a maximum of 2.75%, while inflation stands at 2.9%.
That is an enormous sum of money, which could be used to provide a stimulus to the economy, but the banks are tending to let the money lie to increase their own reserves. According to Unizo, the organisation that represents small businesses, one in four of them has problems obtaining credit from the banks for investment. That is one of the reasons, says Unizo, why bankruptcies in August hit a record high of almost 1,200, with the loss of 13,000 jobs.
“We helped the banks when they needed it,” Peeters said. “Now it’s up to the banks to cooperate resolutely and to fully support the revival of the economy.” The Flemish government, he said, will provide support for the provision of credit, via the guarantee system and Gigarant, a guarantee fund for investments over €1.5 million.
Proposal to split banking sector
Also, last week, the French-speaking socialist party PS was preparing a proposal to introduce a new kind of savings account, based on a French model, which would provide a higher interest rate to savers, while using the deposits for social investments. A proposal to split the banking sector into two parts – investment banking and savings – is also on the table. Peeters prefers to see any change occur at the European level, he said.
“I’m unable to understand how some, ignoring the European context and the global economy, want to go back to the local deposit banks of the old days,” he told Voka. “Obviously the excesses that led to the current crisis have to be tackled. But the pendulum must not be allowed to swing too far to the other side.”
Last week, following the speech to Voka, Peeters held his first meeting with the banking federation Febelfin, to discuss the banks’ contribution to economic stimulus, such as public-private financing and export credit. Although Febelfin maintains that the level of credit given by its members has remained stable, it does accept that conditions have become more strict. The Flemish government has a certain amount of influence with the banks: It has places as shareholder on the boards of KBC and Ethias and is one of the major customers of ING. “It is essential that money continues to flow through our economy,” Peeters said. “We absolutely need to avoid a freeze on financing streams. You have to be able to go on investing. Together with the banks, I want to examine how savings surpluses can, in a suitable way, be fed into intelligent project and export financing of our companies.”
