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German banks are exploiting their market power to unfairly cash in on tens of billions of euros by not passing on higher interest rates to retail depositors, according to the head of the continent’s largest retail deposit broker, Raisin.

While eurozone lenders can now earn 2.5 per cent by depositing liquidity overnight at the European Central Bank, German retail banks on average pay only 0.07 per cent in interest to retail depositors, according to Raisin data.

Lenders in Germany, where mortgage rates have almost quadrupled in a year, will earn a windfall profit of about €40bn this year, according to Raisin calculations.

“This is clearly unfair from a consumer’s point of view,” said Tamaz Georgadze, Raisin founder and chief executive.

“It is a myth that the market for deposits is a fully functioning market,” he told the Financial Times. Many retail customers had become used to low or even negative deposit rates during the long period of ultra-low interest rates, he said, adding that “some are not even aware that they can now receive positive interest on overnight deposits”.

Consumers in other eurozone economies are often offered much higher rates than those in Germany. Some Italian banks, for example, are paying up to 1.5 per cent interest on overnight deposits to retail savers.

German banks have in the past been more generous to savers. During the previous two periods of rising interest rates, in 2008 and 2011, 30-40 per cent of the increases were passed on to retail customers, the Raisin data shows.

Raisin oversees savings assets of more than €30bn, up 20 per cent since mid-2022. The company, which merged with its biggest rival Deposit Solutions in 2021, has about 400 banking partners and more than 750,000 direct customers. It earns commission from lenders that receive deposits through its website.

Georgadze said German banks’ frugality was unlikely to disappear as they had indicated they were planning to raise their pass-through of higher interest rates to 20-30 per cent, still below historical levels.

The Raisin chief warned that this situation could in time trigger a regulatory backlash.

“This is a political and a societal issue”, Georgadze said, adding that large parts of the population were affected.

“In Germany alone, some 80 per cent of citizens who have money on current accounts and overnight accounts are affected,” he said, adding that many held large parts of their wealth this way.

Banks needed to brace for political intervention should they not become more generous on their own, he said. “In Germany, there are laws that prevent extortionate interest on credit but no rules for minimum ones.”

Germany’s municipality-owned Sparkassen, which take pride in not maximising shareholder returns, are among the least generous banks. Two-thirds are not paying any interest on overnight deposits, the Raisin data shows. Large lenders, meanwhile, often woo customers with eye-catching offers that are valid for only a limited amount of time, according to the Raisin chief executive.