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Competition for customers:
"Offering the interest account now is the next logical step for us," says Trade Republic boss
Christian Hecker
Photo: Thomas Trutschel / imago images/photothek
The online broker Trade Republic is allowing its customers to benefit from the interest rates that are rising again, thereby heating up competition in the industry.
Trade Republic announced on Wednesday in Berlin that every customer should now receive 2 percent effective annual interest on the money balance in their clearing account.
Interest is to be paid monthly.
The offer is valid for cash balances of up to 50,000 euros.
With this step, Trade Republic wants to become Europe's largest savings platform.
The fintech company of the founders
Christian Hecker
(33),
Thomas Pischke
(32) and
Marco Cancellieri
(28) is one of the most valuable European tech companies with a valuation of almost five billion euros.
The mobile broker, founded in 2015, offers commission-free ETF and share savings plans as well as investments in cryptocurrencies.
Trade Republic grew rapidly in Corona times, but now the recession and deficiencies in the old business system are troubling the company.
"We are effectively offering 2 percent per annum for all existing customers and for all new customers," Hecker told Reuters news agency.
"There's no star on it either, it's not limited in time."
What Trade Republic offers is the highest effective interest rate per annum that exists in the German market.
The phase of negative interest rates is over
From Hecker's point of view, the phase of negative interest rates in Europe will be over for the foreseeable future.
"We are now probably facing several years of positive interest rates," he said.
In the summer of 2022, in its fight against high inflation, the European Central Bank (ECB) completed the turnaround on interest rates and has now raised the key rates four times in a row, sometimes in unusually large steps.
Negative interest rates have been abolished: The deposit rate that banks receive from the central bank for parking excess funds and which is currently the relevant interest rate for the financial markets is now 2.0 percent.
This was still negative in June 2022, which meant penalty interest for the institutes.
ECB President
Christine Lagarde
(67) has also announced further interest rate hikes.
Trade Republic's existing business is already relatively large, Hecker said.
"Offering the interest account now is the next logical step for us."
Trade Republic has become one of the largest brokers in Europe in recent years.
"Today we already have well over a million customers and manage several billions in client assets," he explained.
Last year, Trade Republic closed another round of financing for 250 million euros.
This was led by the Canadian pension fund Ontario Teachers.
The abrupt end of the zero-interest era, inflation, war, the energy crisis and the generally bleak prospects make it harder for many of the companies that were just hyped to raise capital.
Investors and venture financiers are becoming more selective, the pressure on disruptors, who are often in deficit, is increasing to become profitable much faster.
dri/Reuters
