MADRID, Dec 5 (Reuters) - Banco Santander is cutting back on interest and other incentives for some customers of its flagship current account in Spain because of pressures from ultra-low interest rates in the euro zone, it said on Tuesday.
Spain’s largest bank launched the 1-2-3 account, which offers customers cash and other rewards for keeping stable deposit balances and using it to pay bills, in 2015. The aim was to attract more customers in Spain, where the bank’s revenues rose by just 1 percent in the first nine months of 2017.
Like European rivals, Santander is trying to increase earnings from lending and other activities in Spain as interest rates hover at historic lows and rising competition erodes margins.
Santander said in a statement it would lower the threshold for clients to receive interest on their 1-2-3 accounts to 10,000 euros from 15,000 euros from Feb. 10.
Santander has not said how much it has to pay its around 2 million 1-2-3 account holders and it expects any impact to be offset by an increase in customers.
The change would boost Santander’s annual net interest income by around 100 million euros ($118.44 million), Spanish brokerages said.
Account holders will still benefit from a 3 percent interest rate on balances from 3,000 euros to 10,000 euros, 2 percent between 2,000 euros and 3,000 euros, and 1 percent for between 1,000 euros and 2,000 euros, Santander said.
This move also follows a decision by Santander to change the pricing of its 1-2-3 accounts in Britain last year to offer a flat rate of 1.5 percent.
$1 = 0.8443 euros Reporting by Jesús Aguado; Editing by Angus Berwick and Jane Merriman