# AIB Hike offshore deposit rates



## Lightning (11 Aug 2010)

AIB have increased their [broken link removed] yet again. 

AIB are now paying 2.5% for a one year USD term deposit. According to www.interest-rates.org.uk/ this is the second highest offshore USD deposit rate in the world. Anglo offer the highest. 

AIB are now paying 3.0% for a one year GBP term deposit. According to www.interest-rates.org.uk/ this is the joint highest offshore GBP deposit rate in the world. Anglo also offer 3.0%.

AIB are clearly seeking more deposit though the back door offshore route. In my opinion, these offshore rates are unsustainable and must be adding to AIB costs. I think there is a lack of focus by the media on what Anglo & AIB are paying to their offshore customers in order to get deposits.


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## Bobby1 (13 Aug 2010)

In a way I cant blame them. Irish deposit rates are very unsustainable. 

Anglo Irish are paying 3.50% as are INBS, Whatever about Anglo, but INBS do not have a future and are pushing the cost of retail funding up for other insitutions.

If AIB were to compete in Ireland, they would need to be in the 3.30-3.50% space for 1 year fixed deposit.

The Irish Rates are more unsustainable then the offshore rates... they are getting away with paying 3% for 12 months. They would not be able to do that here and attract new business at this cost. There would be a higher cost to attracting the business AIB are obviously trying to acheive in Ireland which would also be adding to their costs.

Its also more prudent I think that they are trying to build their deposit base across more then 1 source. 

Why should the media be focusing on this? AIB/Anglo are trying to attract funding into a different source and are paying rates to do so. Its no different to what INBS, EBS, PTSB are doing here at home (paying way in excess of the market to compete, attract new business and retain existing business)


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## Lightning (14 Aug 2010)

Hi Bobby, 

Some fair points in your post. 

You asked why the media should focus on this? Several reasons. The increasing cost of deposits for AIB will be a key factor in whether AIB will be operationally profitable in the years to come, it will have a correlation as to how much us taxpayers will have to put into AIB later this year and also it has implications for the European Commission competition/state aid decision.     

It is also of note that USD and GBP rates are not directly comparable with EUR rates due to lower FED and BOE base rates versus the ECB re-finance rate. 

Ciaran


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## Lightning (22 Nov 2010)

Anglo have just increased their offshore deposit rates yet again. They are now paying 3.1% for on demand GBP accounts. This is the highest GBP rate on the market. Totally unsustainable.


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## jpd (22 Nov 2010)

If Anglo and INBS were to reduce their rates to the rates in "normal" banks, the existing depositors would flee and then they would be in immediate danger of total collapse - the powers that be seem to think that letting them slowly decline over the next few years will be cheaper in the long run. Unfortunately, it isn't possible to test both hypotheses and then see which would give the better outcome.


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