Criticised for making record profits from the wide spread between interest rates on loans and deposits, Slovenian banks appear ready to start offering higher rates to depositors. NLB, the market leader, announced it would hike rates on 1 September and other banks are expected to follow suit.

Slovenia's biggest bank announced the increase on 24 August, saying it would raise savings account interest rates to 20% of the 6-month EURIBOR rate, which would amount to 0.8%.

The rate for term deposits of between one month and one year will increase from 0.01% to 1%, the bank said and rates for term deposits of over a year will more than double.

The decision follows heavy criticism in the aftermath of the release of central bank figures showing banks made a profit before tax of €533 million in the first six months of the year, up over 150% on the year before.

While net interest revenue reached €661.5 million, which was 104.5% more than in the same period of 2022, non-interest revenue amounted to €317 million, up just 8%.

Slovenian savers have long had some of the lowest interest rates on deposits in the euro area, even as interest on loans surged after the European Central Bank started hiking rates to combat inflation.

But this has not discouraged households from continuing to pile money into savings accounts. Savings hit €26.4 billion at the end of June, up more than 2% from the end of last year.

Slovenia has one of the least developed capital markets in the EU and the bulk of household savings are in banks. Given how conservative savers are, banks had no incentive to lure them with higher interest rate.

The change of heart coincides with rumours that the government is planning a windfall tax on banks to finance the flood relief effort, an idea banks firmly oppose. Instead, they proposed a small tax on all business.

The government remains mum for now but there appears to be bipartisan agreement that a windfall tax is not a bad idea.

Speaking to the press on 24 August, Finance Minister Klemen Boštjančič would neither confirm nor deny the rumours beyond saying that the government was still in talks with banks, and insurance companies, about how they could contribute to the relief effort.