Login
You are...
Products
Business account A professional account with far more comprehensive services than a traditional bank Collection Cash your customers quickly and easily Accounting Anytime provides invoicing software, facilitates your accounting and helps you with administrative formalities. Financing Discover a wide range of services to support your growth. Whether you're self-employed or a large company, our solutions are tailored to your needs. Cash Management View the banking position of all your activities in real time. Put in place an analytical vision of your flows and give meaning back to your banking operations.
Mastercard business cards Discover the services and Mastercard cards available to you. Corporate expense management Capped Mastercard cards with employee rights management. Managing association expenses The dedicated solution for associations to manage their business expenses. Insurance and legal protection Insurance is included in cards or packages, and meets the needs of both the self-employed and large companies. Chartered Accountants To make your life easier and avoid errors in your declarations, entrust your accounting to chartered accountants.
Expense management
Rates

Livret A rate: a likely costly increase for banks

Published December 09, 2021 - 3 mins reading time
Banks Savings Banque de France

Although nothing has yet been decided, rising inflation could lead the government to increase the rate of return on the Livret A, currently set at 0.5%. Given that the Livret A is France's favorite savings product, this decision would probably cost the banks dearly.

Livret A rate: calculation based on inflation and interbank rates

Since February 1, 2020, the rate of return on the Livret A passbook savings account has been 0.5%, a historically low rate that has not turned the French away from this investment product. In fact, since the start of the health crisis, households have been investing their savings in Livret A passbooks, which are highly acclaimed for their flexibility.

Since January 15, 2020, the method for calculating the Livret A rate of return has been based on two indicators: inflation and interbank rates. Inflation is rising steadily, reaching 2.6% in October.

As a result, the Livret A rate of return is set to rise in February 2022, although the government has yet to confirm this.

Banks await potentially costly decision

For the banks, an increase in the Livret A rate of return would not be excellent news. At present, 50 million French people hold a regulated savings account, with a total of 470 billion euros in outstandings.

While Caisse des Dépôts (CDC), which manages regulated savings, is responsible for the bulk of this likely increase in the Livret A rate, banks are also required to distribute a portion of the return to their customers.

According to projections by Fitch Ratings, to which Les Echos has access, the annual amount for banks would be 460 million euros if the Livret A rate were raised to 0.75%. This figure could rise to 920 million euros if the rate were raised to 1%, i.e. between 0.3% and 0.6% of the banks' net banking income.

Taking inflation and short-term interbank rates into account, the Livret A rate of return should be around 0. 8% from February 2022. The government is awaiting the recommendation of the Banque de France before making its decision.

Despite some reluctance, given that the trend is to encourage consumption to promote economic recovery, it seems complicated to refuse an increase in the rate on France's favorite savings product just a few months before the presidential elections. All the more so since, when inflation is taken into account, the real rate of return on the Livret A is not 0.5%, but -2.1%.