Institutions passing on ECB rate increases

With regard to the recent 25 basis points increase to the ECB rate, I have learned that Rabodirect, for example, are passing on just 15 basis points of this increase to their online savers.

Is there any justification for not passing on the full increase to savers? Or is this just another example of a bank boosting it's profitability?

In contrast, the borrowing rates always seem to increase by the full amount of the ECB increase.

It's their prerogative to do whatever they want with rates. If you don't like it, you can always switch to another bank with a better rate. That said, they are stil offering an interest rate over the ECB base rate.

Of course they can do as they wish with the rate increase, but what I am asking is whether there is any explanation or logical reasoning behind a bank's decision not to pass on the full increase to savers?

Hello summerhill,

where did you get this info about Rabo passing on 15 basis points of the recent 25 basis points increase in the ECB rate?

I emailed them last week I think and was told no decision had been made to increase the rabo rate and I see no sign of it on their website.

Kirian, I am a customer of RaboDirect. I gave them a call yesterday and was advised that the above mentioned increase will be applied on Monday morning.

Northern Rock are only passing on 15bp as well, I believe this will be a trend going forward

summerhill said:

what I am asking is whether there is any explanation or logical reasoning behind a bank's decision not to pass on the full increase to savers?

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summerhill said:

Or is this just another example of a bank boosting it's profitability?

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I think you have answered your own question. That's business.

summerhill said:

Or is this just another example of a bank boosting it's profitability?

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Would you buy shares in a bank that didn't make a profit?

Regarding RaboDirect - best thing is to start writting to them / phoning / e-mailing them telling them you expect them to increase their rates, in line with recent ECB increases (same for all other institutions infact)....

Purple said:

Would you buy shares in a bank that didn't make a profit?

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Would you put your savings in a mutual institution that did not pay a permium, above and beyond other savings accounts provided by banks owned by their shareholders ? (EBS certainly think you should, based upon their shameful savings rates )


It's a case of move to the best deal, time & time again in this country, imho. Be it deposits, loans, credit cards etc etc

Cheers

G>