The deposit war surges on
(25 May 2010 – Australia) A need to diversify wholesale funding and pump up liquidity levels has seen banks and other financial services begin paying the highest margin above the official cash rate in more than a decade.
Investors now have access to interest rates of more than six percent for their at call or term deposits, with virtually no-risk; even better is that the higher rates look set to become a permanent feature available on the market.
Mandy Simpson, general manager, Australia and New Zealand Banking Group, told the Australian Financial Review that for a period of time the bank saw a return of appetite for other investments.
However, that is certainly dropping off now with more instability in equity markets, especially with the sovereign risk problems in Europe and taxation changes in the mining industry, Ms Simpson added.
Before the global financial crisis, the margin paid for term deposits was around 0.50 percentage points below the official cash rate. Now it has shifted to around one percentage point above the official cash rate, Malcolm Eddy, the Reserve Bank of Australia’s assistant governor noted in a recent speech.
Ms Simpson highlighted, when speaking to the Australian Financial Review, that the end of 2009 was extremely aggressive; adding that the bank had seen high growth rates for both term deposits and at-call savings accounts.
Ms Simpson also noted that banks currently seemed to be focusing the majority of their advertising budget on deposits.
In a highly competitive move Rabobank has tried to grab a chuck of the deposits action, launching a campaign that sees the lender offer 6.40 percent until December this year.
Mandy Simpson, general manager, Australia and New Zealand Banking Group, told the Australian Financial Review that for a period of time the bank saw a return of appetite for other investments.
However, that is certainly dropping off now with more instability in equity markets, especially with the sovereign risk problems in Europe and taxation changes in the mining industry, Ms Simpson added.
Before the global financial crisis, the margin paid for term deposits was around 0.50 percentage points below the official cash rate. Now it has shifted to around one percentage point above the official cash rate, Malcolm Eddy, the Reserve Bank of Australia’s assistant governor noted in a recent speech.
Ms Simpson highlighted, when speaking to the Australian Financial Review, that the end of 2009 was extremely aggressive; adding that the bank had seen high growth rates for both term deposits and at-call savings accounts.
Ms Simpson also noted that banks currently seemed to be focusing the majority of their advertising budget on deposits.
In a highly competitive move Rabobank has tried to grab a chuck of the deposits action, launching a campaign that sees the lender offer 6.40 percent until December this year.
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