# Northern Rock Losing Competitiveness?



## oldtimer (7 Jun 2007)

Following recent ECB increases Northern Rock have failed to pass on the full 0.25% to its savers. They have stated their on line demand account will increase from 4.30% to 4.50%, once again falling short. Other financial institutions have caught up with them i.e. Anglo Irish Bank are increasing their 30 day notice account from 4.25% to 4.50%. NIB are doing likewise with their Tracker Deposit Account and watch others follow with full 0.25%. I think it is disappointing to see Norther Rock remove themselves as market leaders. I feel they have got somewhat indifferent towards the Irish saver.


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## DrMoriarty (7 Jun 2007)

I think it's best neither to attribute nor exhibit emotional/human qualities like 'loyalty', 'indifference' or whatever to banks. They're in the business of making the highest profits they can by legal means; as savers it's up to us to seek the best possible return. NR probably calculate — perhaps correctly — that enough punters will remain with them out of inertia, so they will only move to match the competitors' rates if and when they reckon that to do otherwise will cost them more in lost business than they gain by not passing on the full ECB rate increase.


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## MugsGame (7 Jun 2007)

> NIB are doing likewise with their Tracker Deposit Account



Do NIB currently have an ECB deposit a/c you can lodge a lump sum to? (There wasn't one listed on their web-site yesterday.). Am curious as will be updating the Best Buys in the next week to allow for the increases.

NR probably see Rabo as their main competitor. They have an [broken link removed] on their web-site at present (at least, I assume it's a typo and neither of their current rates are 4.75%!).

Probably the most competitive account at the moment is Irish Nationwide's FlexiSaver 21 - ECB+1% on balances up to €75,000. They may be reducing this for accounts opened in June; has anyone seem written confirmation that the original offer has been extended?


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## oldtimer (7 Jun 2007)

NIB tracker deposit a/c series 2 pays ECB+0.50% on amounts €20,000 to €50,000.
The Irish Nationwide Flexisaver 21 - ECB+1% on balances €40,000 to €75,000 is extended to 31st December 2007, according to their website.


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## DrMoriarty (7 Jun 2007)

MugsGame said:


> They have an [broken link removed] on their web-site at present (at least, I assume it's a typo and neither of their current rates are 4.75%!).


 What typo? I see 5.0% there at the moment...


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## MugsGame (8 Jun 2007)

oldtimer said:


> NIB tracker deposit a/c series 2 pays ECB+0.50% on amounts €20,000 to €50,000.



That's Series II of the account. It's not available to new account holders, and current holders can't lodge to it. So if I wanted to deposit a lump sum today, it's not an option.



> The Irish Nationwide Flexisaver 21 - ECB+1% on balances €40,000 to €75,000 is extended to 31st December 2007, according to their website.



ECB+1% is guaranteed until then, but the prospectus currently says the account can only be opened until end of May 2007.

I know the above sounds pedantic -- but I just want to get the Best Buys as correct as posisble. If you can find something on their web-sites that contradicts what I'm saying, please link to it.




DrMoriarty said:


> What typo? I see 5.0% there at the moment...



When I posted yesterday the ad at the top said 4.75% rather than 5%. It's a flash ad, so maybe they rotate them, or maybe they put the wrong one up in preparation for a change.


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## oldtimer (8 Jun 2007)

Sorry Mugsgame. I base my knowledge on what the respective call centres tell me - I suppose this can be risky - should wait for website update. For example this morning I rang both Irish Nationwide and NIB -
(1) *Irish Nationwide*: Is the flexisaver 21 - ECB+1% still available? Answer ''*Yes*'.'' Is there a closing date? *''Middle of the month*.'' Is there a date set? ''*No*.''
(2) *NIB:* Is the Series II ECB+0.50% still available? ''*No*.'' What option have you for €20,000? *''Regular Saver Account*.'' What rate of interest has it? *''Will get your local branch to ring you back*.''


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## ClubMan (8 Jun 2007)

Referring back to the original post - while it's disappointing that _NR _have not passed on the recent _ECB _rate increases in full isn't it the case that they are still pretty competitive on deposit rates for *demand deposits *of €1K+?

The _FlexiSaver 21 _rates that I see on the _INBS _are not up to date with respect to the latest _ECB _rate increase. Also - remember that _INBS FlexiSaver 21 _pays 5% only on €40K-€75K with 21 days notice for access. On €20K-€40K they pay 4.75%.


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## oldtimer (8 Jun 2007)

Agreed, but I always looked upon them as market leaders. Over the past 3 ECB increases of 0.25%, in effect, they have passed only *2* to their savers, i.e. they have increased by .15%, .15% and now  .20% and that is the main point I am making.
By the way, with reference to my earlier post re NIB, they have rung back and pointed out, while their Tracker Deposit Account Series II is closed, their Regular Saver Account for lump sums is still available to new and existing customers.


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## justsally (8 Jun 2007)

> NR probably calculate — perhaps correctly — that enough punters will remain with them out of inertia,


 
I'm probably one of those punters!!!! (and I really don't want to be  )

If I transfer E74,400 from Northern Rock (E75,000, less 6 x E100,to cover July - December monthly saving of E100)   I presume I could open the flexisaver account. Is it worth the hassle?

Thanks


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## ClubMan (8 Jun 2007)

justsally said:


> If I transfer E74,400 from Northern Rock (E75,000, less 6 x E100,to cover July - December monthly saving of E100)   I presume I could open the flexisaver account. Is it worth the hassle?


It's not much hassle and a quick crunch of the numbers should tell you whether or not it's worth your while. If you lodge close to the €75K limit for FlexiSaver 21 then you might want to have interest paid to another account so that you don't breach the deposit limits on the account. Note also that you can opt for monthly payment of interest at no penalty (i.e. no lower than the normal _CAR _unlike _NR's _monthly versus annual interest payment options).


oldtimer said:


> Agreed, but I always looked upon them as market leaders.


But aren't they still at least in second spot for demand deposits of €1K+ behind _Rabo _who offer 5% on amounts between €1 and €10K?


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## oldtimer (8 Jun 2007)

Assuming you transfer €75,000 from NR (4.50%) to Flexisaver (ECB+1%) I think it calculates as follows for 6 months - NR would earn €1350, Flexisaver would earn €1500, allowing for DIRT - €150 into your pocket.


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## justsally (8 Jun 2007)

Thanks Clubman and Oldtimer.   I hadn't thought of the accumulated interest!!!!     So if I'm right in my assumptions the interest on a Rabo a/c also earns interest at a lower rate.   If only the number crunching was easy for me .    Thank goodness for the helpful people on askaboutmoney.


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## ClubMan (8 Jun 2007)

justsally said:


> Thanks Clubman and Oldtimer.   I hadn't thought of the accumulated interest!!!!


I don't understand what you mean?


> So if I'm right in my assumptions the interest on a Rabo a/c also earns interest at a lower rate.


 No - you get 5% _CAR _on up to €10K. Same rate as _INBS _on sums of €40K-€75K (albeit with 21 days notice of withdrawals). With _NR _you get 4.5% _CAR _on sums of €1K+ but if you opt for monthly rather than annual interest payments then the rate received is 0.25% less. Unless you need monthly interest payments then you should opt for _NR's _annual rate. Even if you don't deposit funds for a full year you don't lose out and get the full rate pro-rata to the date of withdrawal.

All rates above are gross and ignore _DIRT _at 20%.


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## justsally (8 Jun 2007)

> you might want to have interest paid to another account so that you don't breach the deposit limits on the account.


 
I meant the interest.    I'm a little clearer now, thanks again


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## Guest124 (11 Jun 2007)

I'm delighted with the Anglo Irish Bank move on rates as I went with them recently instead of Northern Rock.


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## ClubMan (11 Jun 2007)

Why? [broken link removed] are still paying less than _Northern Rock _other than on their regular saver account and long term fixed rate accounts - and particularly on their demand deposit account (3.80% gross _CAR_) which is the one most comparable to _NR's Demand Online _account. And this is before _NR's _increase from 4.30% to 4.50% gross _CAR _kicks in next month! Like the _Indo _in recent months I think some people are getting confused and missing the point that while _NR _may not be passing on _ECB _rate increases in full they still offer one of the best demand deposit rates for sums of €1K+. The _Sunday Indo _even recently urged people to avoid _NR _because they were "ripping people off" in doing this!


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## MugsGame (11 Jun 2007)

Anglo are reputedly offering 4.5% on their 30 day notice account soon, which is a few weeks before NR offer 4.5% on their demand account. It's not a huge amount of notice to give to get a good rate that doesn't require you to have Internet access. Though if you don't mind giving notice, Irish Nationwide would be better still.


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## ClubMan (11 Jun 2007)

Their website still says 4.25% and doesn't say when rates will increase. _NR_ make it clear when their _Demand Online _rate increases from 4.30% to 4.50%. Obviously specific terms & conditions might mean that one account is more suitable than another for specific individuals. However when judging things purely on access and deposit rate _NR _would still seem to beat _Anglo_ and others for demand deposits of €1K+ as long as internet access only is not a problem. The way some people here and elsewhere are talking one would think that _NR _had dramatically slipped from the top or near the top of the deposit returns charts or something.


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## DrMoriarty (11 Jun 2007)

I know what you mean, but let's face it — _neither _NR nor Anglo will send you those wacky, 'push-out-the-envelope' marketing emails...


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## oldtimer (11 Jun 2007)

Anglo have prominent ads in all national newspapers over the past few days announcing their new rates which take effect from 14th June.


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## Guest124 (11 Jun 2007)

ClubMan said:


> Why? [broken link removed] are still paying less than _Northern Rock _other than on their regular saver account and long term fixed rate accounts - and particularly on their demand deposit account (3.80% gross _CAR_) which is the one most comparable to _NR's Demand Online _account. And this is before _NR's _increase from 4.30% to 4.50% gross _CAR _kicks in next month! Like the _Indo _in recent months I think some people are getting confused and missing the point that while _NR _may not be passing on _ECB _rate increases in full they still offer one of the best demand deposit rates for sums of €1K+. The _Sunday Indo _even recently urged people to avoid _NR _because they were "ripping people off" in doing this!


 

-within days Anglo Irish Bank Interest will be higher with the 30 day notice requirement a/c than Northern Rock. Yes they will only be higher for a few weeks but it's still a positive move.


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## muesli (13 Jun 2007)

I have just looked at the NR website and their (limited) interest rate increase will only be passed on from 06 July !! Not impressed with this..


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## ClubMan (13 Jun 2007)

muesli said:


> I have just looked at the NR website and their (limited) interest rate increase will only be passed on from 06 July !! Not impressed with this..


Why? Where can you get a better deal other than, say, up to €10K @ 5% with _Rabo_, €20K-€40K @ 4.75% or €40K-€75K @ 5% with _INBS _(21 days notice)?


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## muesli (13 Jun 2007)

my point being why does it take a month for them to pass on the rate increase ? Is this normal ?


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## ClubMan (13 Jun 2007)

I think it depends on the financial institution. Not every institution passes _ECB_ rate changes on immediately or in full even when they offer _ECB _tracker products.


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## muesli (13 Jun 2007)

ah ok, I see...I have an NIB account also and they have already passed on the full amount so I thought NR would do the same..


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## ClubMan (13 Jun 2007)

What rate are you getting with _NIB_? Is it better than _NR's _current rate of 4.30% or their rate from July of 4.50%? With what conditions?


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## muesli (13 Jun 2007)

Its an ECB Tracker Series I - it's at 5% for > 20K

Ok, I understand that NR is under no obligation to increase their rates (unlike the NIB account) - but I still stick to my original point that if NR raise their rates, they should do it quicker than a month down the line..It would be interesting to see how quickly they raised their rates when they were a new entrant in the Irish market ?


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## MugsGame (13 Jun 2007)

In NR's defence -- they have a promise that they will write to you before any rate changes. This adds a week or two. They were equally slow to lower rates, from what I can remember.


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## oldtimer (18 Jun 2007)

I wonder how many big savers are transferring from Northern Rock (4.50% from 6th July) to Irish Nationwide  Flexisaver 21. INBS rates for €20,000 + (4.75%) and for €40,000 to €75,000 (5%) are very competitive and they make a firm commitment on rates up to 31st December 2009.  Admittedly 21 days notice for a withdrawal is sought but one can withdraw without the 21 days notice incurring a penalty equivalent to 21 days interest on the a amount withdrawn, which is not too punitive. The offer closes on 30th June.


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