The battle for deposits amongst Australian lenders seems to be petering out, with only two of the country’s top online savings accounts passing on November’s interest rate hike by the Reserve Bank of Australia, to their customers in full.
Despite failing to pass on the interest rate increase to depositors, bank’s continue to make the argument that higher funding costs are the reason behind higher interest rates which have been passed onto borrowers in excess of official rate hikes by the central bank.
Australia’s largest banks are using high introductory online savings rates to attract retail deposits and expand their deposit bases. Despite the high introductory rates, the lenders later aggressively cut back their deposit rates in order to preserve their profit margins.
The investment bank Macquarie conducted an analysis of the online savings market which found that the big four Australian lenders, as well as some international rivals were offering introductory rates that were as much as 200 basis points higher than the 4.5 per cent official cash rate.
Australian banking major, National Australia Bank (NAB) is in negotiation with Spanish banking giant BBVA about the creation of a British banking joint venture.
Australian banking major National Australia Bank (NAB) and Virgin Money remain in the running for the acquisition of a 318 strong branch banking network owned by troubled British lender Royal Bank of Scotland (RBS), whilst Spanish banking giant Banco Santander remains the front runner, having hired Credit Suisse to advise on its bid.
Sir Richard Branson’s Virgin Money, part of his Virgin Group intends provide robust competition to the Big Four banking groups in Australia, and is launching a car insurance product followed swiftly by deposits and lending facilities in the coming months.