# RTE: ALL AIB deposit rates up 0.25% tomorrow



## Lightning (18 Apr 2011)

http://www.rte.ie/news/2011/0418/aib.html?utm_source=twitterfeed&utm_medium=twitter

Can anyone shed any light on this RTE report ? Does all mean all ? Does it include AIB products that are under the Anglo brand ?


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## Lightning (19 Apr 2011)

An advertisment in today's the Irish Times spells our what this means. 

All AIB branded deposit products with the exception of their 1 year 6 months term deposit product have increased by 0.25%. 

Fair play to AIB for being the second bank to pass on the ECB rate increase to their customers. 

AIB deposit products branded as "Anglo" and "EBS" appear to have not been changed.


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## Sunny (19 Apr 2011)

That's a very strange move. Have they announced what they are doing with variable rate mortgages yet?


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## Lightning (19 Apr 2011)

Why do you think it is strange?


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## Sunny (19 Apr 2011)

Because raising deposit rates by 25bps isn't going to lead to a flood of new money pouring in. Especially when you consider banks with reputations of being 'safer' have done the same and the rates offered by AIB are nothing special. The only thing I can think of is that it was a defensive move to stop deposits flowing out of the bank. If that is the case, there would have to be serious concerns raised about the 'stickiness' of the deposit base in AIB. And to be honest most deposits in there at this stage would be retail based and would not be as rate conscious as corporate so if people are still saving there, they would be likely to stay there even if AIB only passed on 10bps of the increase.

I am just surprised they didn't try to take this opportunity to improve their margins. Also, if I was the Government, I would be asking why don't they not give the full 25bps to depositors and then they might have room not to pass on the full 25bps to variable rate mortgage holders. Again, I don't know anything of the AIB deposit book. Maybe the majority of their deposits are fixed term so this rate rise only affects a small part of their deposit book.


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## Sunny (19 Apr 2011)

Actually I see now they are not passing on the increase to variable rate mortgage customers. At least not straight away. AIB's margins must be healthy enough if they can absorb this. I suppose they are not funding themselves in the market at the moment so they have some leeway.


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## marksa (19 Apr 2011)

Sunny said:


> ... if I was the Government, I would be asking why don't they not give the full 25bps to depositors and then they might have room not to pass on the full 25bps to variable rate mortgage holders...
> ....Maybe the majority of their deposits are fixed term so this rate rise only affects a small part of their deposit book.


 
the fact that AIB and BOI have not increased their variable rate mortgage rates smacks of political intervention. they have not increased their variable rates at all since at least last year, when the other institutions have - e.g. PTSB, and funding costs have sky-rocketed. The fact that they have increased deposit rates again seems politically motivated for the reasons that Sunny has alluded to.

I would suspect that the deposit base of AIB is in fact dominated by Interest free current account balances from personal and small businesses. These are the "stickiest" of deposits as it arises from transactional current accounts. But you are right, the non-current account deposits are probably mainly fixed rate at this stage as they seek to get longer-term deposits to meet regulatory liquidity requirements.


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## Lightning (20 Apr 2011)

All Anglo AIB rates have now also increased by 0.25%.


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## MugsGame (3 May 2011)

CiaranT said:


> All Anglo AIB rates have now also increased by 0.25%.



Possibly only for new customers, if my online statement is to be believed.


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## theresa1 (3 May 2011)

My Premium Demand A/c went to 3.35% (less than €100,000) and I was with Anglo for a few year's.


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## Lightning (3 May 2011)

MugsGame said:


> Possibly only for new customers, if my online statement is to be believed.



All customers get the increase.


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