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When will Ireland's retail bank cartel start to offer deposit account holders interest again?

  • 07-03-2023 2:16pm
    #1
    Registered Users Posts: 3,347 ✭✭✭


    I have seen reports that the European Central Bank rates are due to be increased again soon. The predicted increase in rates this month would I think make the deposit rate at the ECB 3% which as I understand it would allow AIB, Bank of Ireland and the other Irish banks who continue to offer their customers with money on deposit an effective rate of 0% to make a 3% per annum profit on the back of their customers savings simply by depositing the same funds themselves with the ECB. Why did the Irish government use so much tax payers money to save these banks from collapse in the recent credit crisis if they were not going to get them to provide reasonably priced services to people in this country in need of financial institutions to cater for their needs?

    Even the current accounts that waved charges on transactions and services if a sufficient amount was on deposit in the account are a thing of the past and while ATM machines are becoming harder to find the charges for the services that are still needed to live in this country increase regardless of what the ECB are doing to allow those with some money get some relief from these costs with interest payments on their cash on deposit. Do we all need to move our saving to non Irish EU financial institutions like Trade Republic based in Germany?



Comments

  • Registered Users Posts: 3,347 ✭✭✭macraignil


    So I'm guessing by the number of replies that deposit interest to customers of the main Irish banks isn't on the way any time soon?



  • Registered Users Posts: 127 ✭✭connected1


    Unbelievable isn't it? Irish mortgage interest rates are rising, but interest rates on Irish saving accounts are paltry



  • Moderators, Business & Finance Moderators, Motoring & Transport Moderators, Society & Culture Moderators Posts: 67,523 Mod ✭✭✭✭L1011


    When a competitor decides its worth coming in to the market to scoop up deposits, like Northern Rock and Nationwide UK etc did in the past, and/or State Savings go up significantly.

    Currently it seems they can still fund themselves just fine without having to offer deposit interest; and the state is still able to borrow cheaply so doesn't need to push State Savings rates.



  • Registered Users Posts: 43,024 ✭✭✭✭SEPT 23 1989


    The money lenders (and that’s all they are no matter how much they try and dress it up with branding for the vulnerable people who buy it) are the absolute scum of the earth nothing lower

    but people will still try and defend them



  • Registered Users Posts: 16,310 ✭✭✭✭Leg End Reject


    Permanent TSB have increased their variable rate deposit from .4% to .75%, balances over €50k remain at .1%.

    I don't have €50k just sitting in a bank account but I've no idea where to get a better return.



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  • Registered Users Posts: 300 ✭✭keynes


    There's something very troubling about the banks getting 3% interest from a European institution (that fundamentally is meant to act citizens' behalf) and not passing any of it on to customers. Banks should be obliged to pay at least some of this to depositors.



  • Registered Users Posts: 1,068 ✭✭✭crusd


    Do people honestly believe the banks actually have all their cash on deposit and that they are not leveraged up the kazoo?

    A lot of the cash assets of banks will be in government bonds. The yield curve on many of these is inverted. This means they are losing money. A large part of the reason SVB went bust in the US and will result in interest hike stopping and even reversing to an extent



  • Registered Users Posts: 13,036 ✭✭✭✭Geuze


    Here is the AIB balance sheet for 2021 and 2022.

    48.5bn deposits, plus more deposits in the non-interest bearing liabilities

    Total deposits = 102.4 bn


    Loans to customers = 58.7bn

    Loans to banks, including central bank = 49bn





  • Registered Users Posts: 13,036 ✭✭✭✭Geuze


    Here are AIB assets:

    130bn, of which

    Loans to customers 60bn

    Financial assets/bonds = 16bn

    Deposits with other banks/ central bank = 40bn





  • Registered Users Posts: 13,036 ✭✭✭✭Geuze


    Note that the ECB deposit rate is 2.5%, and that is just since Feb 2023.

    But I see your point.

    There simply isn't any competition for deposits.



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  • Registered Users Posts: 3,347 ✭✭✭macraignil


    Just looked at the details on their deposit interest rates when I saw on the news last week that they were making changes and there seems to be quite a bit of fine print about them including a requirement for some other type of account to manage the funds and that the 0.75% rate is for a regular saver type account which I am sure is also likely to incur a regular service charge for the regular transactions required to be able to hold such an account. Not investigated it any further but got the impression myself that a lot of this interest payment for anything deposited with them would be eaten up with management fees from banking with them. Open to correction on this though as I did only look at details available onliine that did not include their full account service charges structuring.



  • Registered Users Posts: 16,310 ✭✭✭✭Leg End Reject


    I'm not sure either, I got a letter during the week about the rate change.

    I have an online savings account with a monthly standing order from my current account, I don't remember the terms but it has never earned much interest, just a safer piggy bank than stuffing it under the mattress tbh.



  • Registered Users Posts: 3,059 ✭✭✭Sarn


    The PTSB regular saver account does not have any fees or service charges associated with it. In all my years with various deposit accounts I have never had to pay any fees or charges.



  • Registered Users Posts: 3,347 ✭✭✭macraignil


    I was suspicious of the text about Open24 Service detailed under the regular saver rate and thought that this service would have been where the fees would be applied, but I may be misinterpreting what the text means in practice: Link

    "You can only open Online Accounts by using the internet within our Open24 Service and you are a registered user. Once opened, you can transact on your account by using our internet and telephone banking services. You cannot transact on the account by visiting our branches"

    The fact that they say managing these accounts by visiting their branch is not allowed would also be unacceptable to me.



  • Registered Users Posts: 16,310 ✭✭✭✭Leg End Reject


    Banks resent their customers entering the premises and direct everyone to the self service options. That's fine if you're anyway tech savvy, but it must alienate some older people or some with learning difficulties.



  • Registered Users Posts: 3,059 ✭✭✭Sarn


    PTSB’s Open24 service is just their online banking system, the equivalent of BOI’s 365 online.



  • Registered Users Posts: 3,347 ✭✭✭macraignil


    Not sure I fit into either of those categories but my reasoning is that for something as important as my savings I'd be concerned that access via online means only, increases the chance of being exposed to fraud or unauthorised access to the savings that I would find very difficult to replace. I have had my credit card number used illegally(possibly through a company I ordered goods from online having a breach in their computer system) in the past and not been able to do my job on more than one occasion due to malicious software attacks on the computer network where I work. Being forced into internet banking should not be allowed in my opinion as it creates a greater risk for many bank customers and not just the elderly or those with learning difficulties.



  • Registered Users Posts: 16,310 ✭✭✭✭Leg End Reject


    I'm not sure why it's arranged like that, but if I want to withdraw from my savings account I have to transfer the money to my current account, it doesn't show up as an ATM option.

    I don't know if there's a cost saving for the bank involved there, but I'd imagine there is.



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