Westpac To Up The Ante In War For Australian Term Deposits

Post by Sharat on May 27, 2010 · Under Australian Economy, Business News, Capital Markets, Company News, banking, interest rates · Comment

After a brief respite in the war for depositors, Westpac chief executive Gail Kelly is upping the ante amongst the big four lenders, by saying that Westpac intends to increase its reliance on deposit based funding for the year.

According to The Australian newspaper, Mrs. Kelly sent an email to managers, in which she said that wholesale international funding markets would continue to fracture even further as a consequence of the European sovereign default crisis ripping its way through international credit markets.

Mrs. Kelly added that following Westpac’s first half results announcement, international shareholders had questioned the lender on what its funding position was, and the source of its funding.

“Everywhere we went, Phil (Coffey) and I were asked about funding as well as proposed regulatory changes and their impacts on Australia. The importance of deposits is not a new theme for us and a vital part of what we need to do to earn all of our customers business. The competition for retail deposits is really ramping up and it’s clear that our competitions also have a similar focus. They too recognise the importance of deposits as a funding source.” Mrs. Kelly said.

Currently Westpac offers the highest interest rates on savings accounts in the market, with a current three month deposit special offer, that is 100 basis points higher than its nearest rival and 50 basis points higher than the official cash rate.

Westpac’s special offer on a three month deposit of up to $25,000 is 5 per cent, whilst its nearest rival NAB is offering a similar deposit with 4 per cent interest. CBA’s product offers 3.2 per cent interest, whilst ANZ’s is 2.5 per cent interest.

The bank is offering 5 per cent interest on deposits of up to $25,000, ahead of NAB at 4 per cent, CBA at 3.2 per cent and ANZ at 2.5 per cent.

Term deposit interests rates in Australia have fallen recently, offering a little respite from the increasingly competitive war for depositors. That fall in interest rates prompted the central bank to declare that the intense competition for depositors between the Big Four lenders was start to dissipate. Australian banks had increased their deposit rates to attract more deposits in response to the global financial crisis.

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