(27th January 2011 – Australia) The bank deposit war appears to be winding down, after a year of trying to out-do each other in pricing for high-interest savings accounts.After the Reserve Bank of Australia’s (RBA) November interest rate increase, only two online savings accounts passed on the interest rise in full.
Pricing for deposits has skyrocketed over the past year, in some cases exceeding wholesale cost, as regulators pushed banks to reduce their reliance on the volatile wholesale funding markets.
Banks are claiming that the high cost of raising deposits is one of the reasons behind their decision to set interest rates higher than the Reserve Bank’s rate.
According to BusinessDay the most aggressive players in online savings – including BankWest (backed by the Commonwealth Bank), CitiBank and National Australia Bank’s Ubank – held on to most of November’s 25-basis-point official rate rise, according to figures supplied by the comparison rate service, Mozo.
Three of the most competitive online savings brands – Rabodirect, AMP and CUA – have dropped their promotional rates entirely.
BankWest, having held on to the official rate rise, pays online savers 7 percent.
Only ANZ and the small Qantas Staff Credit Union passed on the November rate rise in full in their standard and promotional interest rates. The Mozo figures show both are paying 6.25 percent.