How to build a better nest egg

Similarly, Permanent TSB has recently moved its rates downwards. The bank, which took over the deposit book of both Irish Nationwide Building Society (INBS) and Northern Rock’s Irish business last year, has decreased most of its rates as of today (September 18th). From now on, its online regular saver account will only pay 3.5 per cent, down from 4 per cent, while the rate on its 21-day notice account has fallen from 3.35 per cent to 2.85 per cent. Those who put money into INBS’ instant-access account will now only get interest of 2.25 per cent, down from 2.75 per cent previously.

And Bank of Ireland has moved far away from those heady days when it was offering some of the best rates on the market. Now the best rate you can get with the bank is 2.95 per cent.

A MOVE AWAY FROM THE GUARANTEE

While we all know that the move, on that fateful night of September 30th, 2008, to guarantee the entire liabilities of the banking sector was to prove extremely costly for the country, it did however offer some comfort for savers opting to put their money into banks covered by the Eligible Liabilities Guarantee (ELG). But while this guarantee, which covers deposits in excess of the €100,000 guaranteed under the Deposit Guarantee Scheme, is due to run until the end of this year, and may be extended thereafter, institutions are already starting to move away from it.

Earlier this year, Bank of Ireland pulled its Isle of Man and UK operations out of the scheme, while last month, AIB announced that deposits placed with it in Britain and First Trust Bank in Northern Ireland would no longer be covered by the scheme.

And now there are tentative moves to do so across all of Ireland. Since late last year, corporate and institutional investors can avail of the option to make unguaranteed deposits under the ELG scheme, provided that they give their express permission, and in return can get a better rate of return for doing so.

Given the cost of the ELG to the country’s beleaguered banks – last year AIB paid €488 million in ELG fees for example – it is to be expected that where possible, banks will move to drop this cost by offering non-guaranteed savings options. Provided, of course, savers have an appetite for this.