Frontpage News 2013 Danes’ bankbooks a...

Danes’ bankbooks are bursting

2 September 2013

New figures from Denmark’s Central Bank show that the Danes’ total savings have increased by 165bn DKK during the crisis. Every fifth Dane has over 100,000 DKK in bank deposits. The size of deposits rises with educational level and age. Geographically, citizens of Northern Zealand and Western Jutland have most money in the bank.
According to Denmark’s Central Bank, the Danes’ total bank deposits were of 844bn DKK in July 2013. This is a level which, compared to before the crisis, shows that the Danes have significantly more money in their bank accounts today. Since 2008, the total savings have increased by approximately 165bn DKK, cf. figure 1.

’’The great savings come in a time where the interest of deposits is historically low, which means that it is not a lucrative return that is the driving force behind the Danes’ large deposits. Well-knowing that other alternative investments such as obligations also have relatively low returns,’’ explains Chief Economist at the Danish Bankers Association, Niels Storm Stenbæk, and continues:

Increased disposable income

’’On the contrary, the larger savings are more a result of an increased disposable income over recent years, and not least a change in savings- and spending behaviour among the Danish people. The Danes’ crisis awareness has thus made more people build up savings instead of channelling money directly into spending.’’
Figure 1. The development of the Danes’ total bank deposits
Source: Denmark’s Central Bank.
Note: Danish households’ bank deposits in 1,000 DKK, January 2000 to July 2013.
However, the large bank deposits can be undesirable from a personal finance point of view. The interest on deposit accounts are today at such a low level, that the money is eaten up by inflation, and therefore, the Danes risk that their savings lose value. 
From a socio-economic point of view, the large deposits contribute to keeping a low spending quota, which can contribute to reduced economic activity. To create growth, it is necessary to channel a part of the savings into increased consumption.
It could be interesting to try and survey which groups of the people that have significantly much money in the bank, i.a. to see where there is basis for an eventual consumption progress.
In the following, a series of demographic and geographic characteristics, which can contribute to the size of the Danes’ bank deposits, are assessed. 

Large spread in the distribution of bank assets

There is great difference on how much money every single Dane has in his or her bank account. A random sample on 33 percent of the Danish population (based on DST-register data) shows that the vast majority of Danes just keep lower amounts in the bank. Two out of five had less than 10,000 DKK in the bank in 2011. 
A relatively large part of the population is especially capitalised, since more than every fifth Dane has more than 100,000 DKK in bank deposits. Four percent of the population, however, have more than 750,000 DKK, which is the amount that the Guarantee Fund covers up to in case of settlement of a bank. 
Figure 2. Persons distributed on the size of their bank deposit in 1,000 DKK.
Source: Own calculations on the basis of DST-register data, 2011.
Note: The Danes’ average bank deposits in 1,000 DKK. 

Young people have no money in the bank

As figure 3 shows, the bank deposits grow concurrently with the Danes’ age and top around retirement age. Contrary to young people who practically have no money in the bank. 
The fact that it is especially the elderly who have large savings is probably related to their attention towards saving for retirement. At the same time, the older share of the population has a higher income, less debt and thus larger latitude.
Young people do not have the same disposable amount for savings, and besides the study-, housing- and everyday living costs, there is not always money left for saving up.
Among all age groups it shows that particularly men have much money in the bank.
Figur 3. Bankbeholdning fordelt på aldersgrupper og køn, 2011
Source: Own calculations on the basis of DST-register data.
Note: The Danes’ average bank deposits distributed on age and sex.

Deposits rise with educational background

If the population is distributed between highest achieved education, the survey shows a clear picture of higher bank deposits the higher the educational level. 
In the figure below, the different educational categories have been divided into deciles according to their bank deposits. I.e. with the 10 percent in the group which has the lowest bank deposits in the first decile and the 10 percent with the highest bank deposits in the tenth decile.
Persons with professional or higher education account for only about 40 percent of the people in the bottom decile (the 10 percent with the lowest bank deposits), while fully 70 percent of the group with the highest bank deposits has a professional or higher education.
Figure 4 Educational attainment of decile groups – Bank deposits in 2011 
Source: Own calculations based on DST register data.
Note: The Danes’ average bank deposits by highest educational level attained.

The largest deposits among people from Northern Zealand and Western Jutland

If we look at where in the country the population has the largest bank deposits, it is particularly citizens of Northern Zealand and Western Jutland, which has a lot of money in the bank. People in Gentofte top with average bank portfolios of over 200,000 DKK.
Conversely, people in and around Copenhagen consistently have the lowest bank deposits, and particularly in the Western District of Copenhagen, deposits are significantly lower than in the rest of the country. In Ishøj and Albertslund municipality, the average deposits are less than 70,000 DKK.
Figure 5. Balance divided on municipal level, 2011 
Source: Own calculations based on DST register data.
Note: The Danes’ average bank deposits by the municipality level.

Significant differences in the industries

Also across industries, there are large differences in bank deposits. Some of the top scorers are employees who are employed in real estate, leasing of commercial real estate or agriculture. Persons with main job in these industries have on average more than 200,000 DKK in their bank accounts.
Persons employed in the trade- and transport industry have with average deposits of less than 80,000 DKK thus much smaller savings in the bank.
Figure 6. Balance by main sectors
Source: Own calculations based on DST register data.
Note: The Danes’ average bank deposits by sector level. Main branch indicates the industry of the workers' main jobs throughout the year.
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