Finance coys join banks in short-term deposit war
The rate war among banks in the deposit rate space is now spreading to the finance companies with PGG Wrightson Finance reacting to Fisher & Paykel Finance’s hikes two weeks ago.
Tuesday, February 22nd 2011, 9:04PM
by Sophia Rodrigues
A fortnight ago F&P Finance made sharp hikes in investment rates which was largely in response to rate increases by PGG Wrightson Finance earlier but now the latter has hiked again in an attempt to align its rates with F&P Finance.
PGG has, however, increased rates only for guaranteed deposits unlike the previous occasion when both the companies raised both guaranteed and non-guaranteed deposit rates. The increase is made for 90-day, six months and one year terms, and is across all the three amount brackets PGG has, that is, below $10,000, greater than or equal to $10,000 and less than $99,999, and greater than or equal to $100,000.
For 90-day deposits, PGG raised the rate by 25 basis points and has managed to beat F&P Finance only for deposit amounts over 10,000 where it is offering 4.90% compared with F&P's 4.75% for a minimum $1,000 deposit.
In case of six months, an investor can get a higher rate of 5.15% or even higher 5.25% with PGG provided the deposit amount exceeds $10,000 or $100,000 respectively. And for one-year deposits, PGG announced just a 15 basis points rate hike and is able to compete with 6.25% new rate only if the deposit amount exceeds $100,000. F&P is offering the same rate for just $1,000 deposit.
Back in the banking arena, Rabobank via RaboDirect is leaving no stone unturned to stay ahead of the competition. The bank has once again hiked six, nine and 12-month deposit rates to beat its own top rates across these terms. ASB seems to have now given up by lowering 90-day deposit rate by 40 basis points last week. It, however, hiked six-month deposit rate by 10 basis points but the 5.10% rate is now very easily beaten by RaboDirect's 5.35%.
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