Bank of Ireland to increase a range of its savings rates in a move to put pressure on rivals

Myles O’Grady, Group CEO at Bank of Ireland. Photo: Naoise Culhane

Charlie Weston

BANK of Ireland to announce increase in deposit rates in a move that has been long called for by savers.

It will also put pressure on rivals, AIB and Permanent TSB, to raise their savings rates.

It comes after the European Central Bank increased its main deposit and refinancing rates seven times since the summer.

Up to now the three main banks, AIB, Bank of Ireland and Permanent TSB, have been slow to increase deposit rates, but have also held back on implementing all seven ECB for new fixed rate and variable rate mortgage borrowers.

Irish banks have some of the lowest interest rates for savers.

There is some €150bn in household savings in the three retail banks and in the credit unions.

Central Bank figures issued recently show that interest rates on household overnight deposits stood at just 0.03pc in in March.

Interest rates on new household term deposits, where you have to leave the in the institution for a certain amount of time, was up slightly to 1.14pc in March.

The equivalent rate in the Eurozone was 2.11pc.

Now Bank of Ireland, which is led by Myles O’Grady, has again increased its deposit rates, following a move in January.

It has introduced what it calls a new SuperSaver deposit account paying a 1.5pc rate for first 12 months.

As part of this customers will receive a discount of €100 on home or car insurance.

To encourage younger savers there will be no minimum monthly lodgement required. SuperSaver will be available in June.

The bank has also announced a 0.25pc increase to its one-year term deposit rates and removed the cap for new one-year term deposits.

Following a 0.25pc increase in January, Bank of Ireland is increasing rates on its Regular Saver personal deposit accounts by a further 0.25 percentage points.

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It said this will allow customers to earn 1pc on its MortgageSaver, GoalSaver, and Childsave accounts, capped at up to €15,000. The new rate is effective from Friday.

The bank is also introducing two new one-year Advantage Fixed Term Deposit Accounts, one for personal and one for business customers.

Each will offer a 0.75pc rate, which is an increase of 0.25 percentage points on current one-year fixed term deposit rates.

Bank of Ireland director for retail in Ireland Susan Russell said: “With a 1.5pc rate, combined with a €100 discount on home or car insurance, we’re doing more to reward regular savers.

“We also want to encourage those who don’t save to start that habit, even with a small amount each month.”

Up to now Permanent TSB has had the best rate in the market. It offers 1.5pc, but this is a five-year product.

Daragh Cassidy of price comparison site Bonkers said the increase in the Bank of Ireland rates was “welcome news for hard-pressed savers who have had to contend with record inflation as well as ultra-low savings rates over the past two years or so”.

But he said the rates on offer from Bank of Ireland, and other lenders, are still pretty low.