Why Recessions Forge Great CEOs Who Think Beyond Cost-Cutting
04/15/2025
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But the CEOs who make history in downturns aren’t the ones with the deepest cuts
September 4, 2023: Those words from Marco Oliveira, a 50-year-old graphic designer from Portugal, underscore a deep-lying pain in Europe, with people bemoaning a lack of return on their security despite overflowing interest rates.
“We are not getting good rates,” a 56-year-old Spaniard said.
European savers complain their stakes have been quick to raise mortgage payments as the European Central Bank has pushed up its benchmark rate but has been very slow at increasing rates for savings accounts.
The ECB has increased rates several times to obtain down inflation since July 2022. This should translate into higher rates both on mortgages and also on deposits. Nevertheless, data shows this is not quite the case.
The critical metric analysts use is the warranty delta, which represents the increase in policy rates that pools pass through to the interest rates on deposits. The higher the figure is, the more banks are passing on.
According to Dutch lender ABN Amro, the average deposit delta in the eurozone in June this year was 47%; this means that, on average, only half of the total 4.25 percentage point increase in ECB interest speeds has been passed on to depositors. The ECB raised its benchmark rate in July 2022 from -0.5% to 0%. The rate is now at 3.75%, meaning that since that first rate hike, the ECB’s primary rate has risen by 4.25 percentage points.
However, the average warranty delta across the 20 countries that share the euro masks stark differences among those nations. For instance, Croatia’s warranty delta is 12%, Cyprus is 30%, and Portugal is 32%. In France, the deposit delta is 73%, and in Italy, it is 62%.
But the CEOs who make history in downturns aren’t the ones with the deepest cuts
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But the CEOs who make history in downturns aren’t the ones with the deepest cuts
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