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.
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 has not said how much it must 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, Spanish brokerages told the press.
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.