New EU Directive Could Break Banking Monopoly in Estonia ({{commentsTotal}})

A new EU directive on banking will make opening accounts in foreign banks much easier, which in turn could increase interest rates on deposits.

Estonian banks pay one of the lowest interest rates on deposits in the EU, ten times lower than in Romania or Bulgaria, Äripäev reported on Wednesday. Banks currently pay on average 0.38 percent interest on deposits of up to a year, the second lowest in the union after Luxembourg (0.27 percent). Romanian banks pay 3.57 percent.

The bill would require banks in the union to clearly display the cost of opening an account and its offered interest rates. If the bill is passed, clients will be able to switch banks without hassles and large penalties.

The new regulations will not come into effect overnight as the directive will have to be approved by member states, which will be followed by a two-year transition period.