AIB Increase Offshore Deposit Rates Again

AIB, have for a 4th time this year, increased their offshore deposit rates. [broken link removed]

AIB have increased their GBP 1 year term deposit rate to 3.25%. According to interest-rates.org.uk, this is the highest GBP offshore deposit rate in the world for a 1 year fixed term.

Given the lower BOE rate of 0.50%, it is has the implicit equivalent to a EUR 1 year term deposit rate of 3.75%.

I believe that these AIB, state bank, deposit rates are totally & completely unsustainable. We as taxpayers and owners of AIB are paying deposit rates to Jersey customers that have no basis in financial reality.

Separately, Anglo have also increased their GBP IOM rates yet again. Although the Anglo IOM unsustainable deposit rates are not as high as the new AIB rates.

If the stated banks offer the quoted interest rates, surely it is cheaper for the Banks than been forced to launch a 6% Bond (or higher) for a longer term. The only saving grace for Anglo & AIB is that they are state owned.

I think that this new rate simply reflects the increase in risk of having a deposit at AIB. S&P has just downgraded AIB to near junk status. AIB UK too. I doubt that AIB Jersey, Isle of Man etc, is any different.

Expat64 said:

I think that this new rate simply reflects the increase in risk of having a deposit at AIB.

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Owned by the Government. And it is on record that the ECB have stated that they would not allow a European Bank fail.

The ECB allowed a Dutch bank to fail.

Expat64 said:

I think that this new rate simply reflects the increase in risk of having a deposit at AIB. S&P has just downgraded AIB to near junk status.

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Exactly. It is no coincidence that the highest risk banks offer the highest deposit rates. They are simply compensating for the high risk involved in depositing money with these banks.