Most offshore euro-denominated savings accounts are paying less than 1% interest – below that of the European Central Bank (ECB) – according to research from Investec Channel Islands.
The private bank found the average rate on euro accounts had fallen over the past three months by more than the ECB rate cut, and stood at 0.96% at the end of July, having dropped by more than 25 basis points since May.
Investec also found that two accounts were paying no interest on deposits of €50,000.
Savers urged to check rate
Laura Preston, of Investec in Guernsey, said: “The ECB rate fell again in May following a number of successive cuts earlier in the year and this is inevitably having an impact on the rates of interest banks are able to offer.
“However, it is unbelievable to see that some accounts are paying such negligible interest or even no interest at all on deposits of as much as €50,000. With such a wide discrepancy in the interest rates available, it is important that savers check that their account is one of those that is still paying a consistently competitive rate.”
The ECB cut its rate by a quarter of one percent in May, one basis point less than the average drop in bank rates. The ECB rate is now 1%.
The research comes as Skipton Guernsey and Scarborough Channel Islands, which are in the process of forming a single Guernsey bank following the merger of their UK building society parent companies, launched a deposit account paying a one-year bonus rate of 1% for new money on top of the normal rate.
The variable rate account has a minimum balance of £10,000, with balances of £10,000 to £49,999 earning 1.75% gross. Balances of £50,000 to £99,000 earn 1.90% and balances of £100,000 to a £5m maximum earn 2.00%.
All balances will earn an extra 1% – if the funds are new – until the end of August next year, after which the account guarantees to pay 1% above Bank of England Base Rate for a further year. It will then guarantee to track and match the Base Rate for another 12 months.
The merger of the Channel Islands banks is expected to be completed by the end of September, subject to regulatory approval. The new entity will be a subsidiary of the UK’s fifth largest building society with £16bn of assets.