KBC reduces fixed-term one-year deposit rate from 4.1% to 3.8%


IN A further sign of the intense competition for deposits easing, Belgian-owned KBC Bank Ireland has reduced its market-leading fixed-term one-year deposit rate to 3.8 per cent from 4.1 per cent.

The bank, which has been aggressively targeting the retail deposit market since last year, lowered rates across a number of its deposit products yesterday, but it is still offering the highest rates on a number of its savings accounts.

“There continues to be downward pressure on money market rates which is translating to across the board reductions in retail deposit rates,” said Dara Deering, head of retail banking at KBC Banking Ireland.

Despite reducing deposit rates KBC still has a market-leading rate on the one-year account with the 3.8 per cent offering, and on the access accounts with 3.25 per cent on offer to depositors.

A rate of 3.25 per cent is also on offer on KBC’s deposit account that pays the interest up-front.

“KBC is a bank that has been around for a long time in Ireland but it wasn’t in the retail space; it has been increasing its footprint in that space,” said Helen Cahill, a director of Dublin firm Finance One, which offers advice on where to place deposits.

Ms Cahill said customers were being drawn more to fixed-term accounts ranging from six months to a year from on-demand accounts as depositors’ concerns had eased about the safety of their money in the Irish banks.

The troika of lenders to the Government agreed to allow the Irish banks to meet a different liquidity measure, known as the net stable funding ratio, instead of the cruder loans-to-deposits ratio to quell the competition for deposits.

Pressure on the banks to meet the loans-to-deposits ratio sparked a deposit war at the end of last year, but this has eased since the start of the year.