Scramble for deposits as domestic banks offer rates of over 4pc
FOUR domestically-owned banks are offering deposit rates of more than 4pc at a time when the European Central Bank rate is just 1.25pc, as the scramble to get funds intensifies.
AIB, EBS, Permanent TSB and Bank of Ireland are engaged in a fierce battle for deposits.
EBS, the former building society that is being taken over by AIB but will remain independently run, launched a two-year account that pays 4.5pc on an annualised basis.
The account mimics one offered by Bank of Ireland that had hoovered up large sums of consumer cash, according to Simon Moynihan of comparison website Bonkers.ie.
Bank of Ireland's 'Double Your Interest' account offers 3pc interest if the money is left on deposit for a year. The interest doubles to 6pc if the money is left for a second year. This works out at 4.5pc in annual equivalent rate (AER) terms, Mr Moynihan said.
Now EBS has launched 'Double Your Return', paying 2pc in year one, 4pc in year two and 8pc if you leave your money on deposit for three years. The AER works out at 4.46pc.
"EBS and Bank of Ireland are far from unique in offering massive interest rates to customers that are prepared lock their money away for a while," Mr Moynihan said.
AIB is offering 4.2pc on its latest two-year term and Permanent TSB is paying 8pc on its 'Interest First' account if the money is locked away for two years -- which works out at 4.2pc AER.
"EBS also has an old-fashioned no-frills 18-month term account that will get you a very decent 4.29pc AER. So now every Irish bank is offering 4pc or more on accounts of two years or less," he said.
He added that domestic banks desperately want one-year and two-year deposits.