Portugal’s Competition Authority (AdC) has opened a public consultation aimed at examining how competition works in the country’s retail banking sector and identifying obstacles that may be holding it back.
The consultation, launched today, is open to consumers, businesses, regulators, public bodies, industry associations, and potential new market entrants. It will remain open until 24 September 2025.
The AdC is particularly concerned about the limited mobility of banking customers in Portugal. Many individuals and businesses face difficulties when trying to compare financial products, sign up for them, or switch from one bank to another. In turn, this limits competitive pressure on banks and reduces the incentives to improve conditions for depositors—especially when customers are unlikely to leave for better offers.
Retail banking plays a key role in the Portuguese economy. Deposits are the main source of funding for banks and the primary savings instrument for families and companies alike. Yet the recent increases in deposit rates by the European Central Bank have been passed on to customers slowly and only partially. The response has been noticeably weaker compared to the quicker rise in interest rates for loans, boosting profits for banks across the eurozone. In Portugal, this trend is particularly evident.
Interest rates on new term deposits for individuals in Portugal remain less attractive than the eurozone average. As of May 2025, the average rate for deposits up to one year was 1.5% in Portugal, compared to 1.84% across the euro area. Among the five largest banks in Portugal—BPI, CGD, Millennium, Novo Banco and Santander Totta—deposit offers are especially uncompetitive. Their average rates were significantly lower than those offered by smaller banks, some of which reach up to 3.65% for the same deposit term.
The AdC also notes that market concentration remains high. At the end of 2024, the five largest banks controlled over 70% of the sector’s total assets and nearly 75% of all deposits. These levels are above the European average and suggest a lack of diversity in market offerings. At the same time, there are structural factors limiting customer mobility. According to a 2022 Eurobarometer survey, only 14.2% of Portuguese respondents with a current account had switched providers in the previous five years—below the EU average of 17%. For savings accounts, the figure was just 6.5%.
Bundling of financial products, such as linking current accounts with term deposits or combining mortgage loans with insurance products, also makes it more difficult for customers to compare offers and move their accounts. These practices may reduce price transparency and reinforce loyalty to a single institution, even when better alternatives are available.
The AdC warns that when customers are unlikely to switch, banks face weaker competitive pressure, which in turn reduces their motivation to improve returns on savings. While some technical factors, like high liquidity coverage ratios and conservative lending practices, may explain banks’ low appetite for attracting new deposits, the Authority believes these do not fully justify the lack of competitiveness in the sector.
The consultation invites stakeholders to share their views and experiences on four main challenges: difficulties in comparing banking and financial products; obstacles in the process of contracting such products; problems with switching banks; and barriers that might prevent new players from entering or growing in the market. Respondents are also encouraged to propose practical solutions to help overcome these barriers and promote greater competition and customer mobility.
Contributions should be sent by email to consultapublica@concorrencia.pt by 24 September. Respondents are asked to include a short description of themselves or the organization they represent. They should also clearly identify any confidential information and provide a public version of their submission with sensitive data removed. Anonymous submissions are possible, if properly justified.
