Financial institutions, which had seen minimal returns on long-held savings, are raising fees on fixed-term deposits as of the start of the year in response to higher European Central Bank rates. Abanca led the way with a customer acquisition push this week, promoting two deposits offering returns between 2.45% and 2.80%. These investment products sit in the market where returns can reach around 3%, though those higher yields come from European institutions or lesser-known providers. Among major Spanish banks, the two new term deposits from the Galician lender stand out as strong performers.
Treasury Bills have gained traction in recent months thanks to attractive yields, yet demand can be variable and prices often tick downward. For instance, the State Treasury recently auctioned nearly 2 billion dollars in short-term debt. Demand surpassed supply, with about 4.574 billion requested. In terms of interest rates, the Treasury allotted 502 million lira for three-month bills, offering 3.538% — below the prior peak of 3.620% in twelve years. Similarly, about 1.495 billion liras were tendered for a nine-month bond, where the marginal rate settled at 3.492%, just under the previous 3.510%.
Meanwhile, Abanca offices this week began the marketing period for two term deposits that will run until February 23 or until the 100 million investment in 12-month and 50-month deposits are fully subscribed. Both accounts will become active on February 28.
The first product is a structured deposit with a 12-month guarantee. True to its name, the term lasts one year and 100% of the invested capital is insured. The coupon depends on the performance of Mercedes-Benz shares from February 28 of this year to February 26, 2025. If the final value is equal to or above the initial value, the coupon is paid at maturity, ranging from 0.80% to 2.45% if the value is lower. For a 10,000 euro investment, the first scenario yields 280 euros and the second 245 euros. After a 19% withholding, the net gains are 227 and 199 euros respectively.
The second offering is an 18-month structured deposit. In this case the period extends one and a half years and the capital remains protected. Interest depends on Pfizer shares traded on the New York Stock Exchange from February 28 this year to August 26, 2025. If the final value is equal to or above the initial level of 2.71%, the payout is the deposited amount; if not, it is 2.52%. For a 10,000 euro investment, the client would receive 271 euros in the favorable scenario and 252 euros otherwise. After tax withholding, the net results are 220 and 205 euros respectively.
No early cancellation
Unlike many other deposits, these two Abanca offerings cannot be canceled ahead of schedule. Investors must wait until February 28 next year for the 12-month product and until August 28 for the 18-month option, protecting the principal and the accrued interest until maturity.
The Galician institution explains that both products target retail clients with varying risk appetites. They emphasize there is no expectation to access funds before the product’s expiration, while accepting the possibility of an uncertain return in exchange for a higher potential yield. Both deposits are backed by the Deposit Guarantee Fund, which offers coverage up to 100,000 euros per depositor.
All Spanish banking investment products come with a risk indicator on a scale from 1 to 7, where 1 denotes the lowest risk and 7 the highest. The risk rating for Abanca’s two new time deposits is 1. The minimum opening amount for either deposit is 3,000 euros.