WORLD - TOU­RISM

In­te­rest hal­ved on 123 pro­duct Lloyds car­ries out re­view. Other len­ders poi­sed to act.

La Presse Business (Tunisia) - - SOMMAIRE - By Nao­mi ROVNICK and Em­ma DUNKLEY

NEW MIDDLE CLASSES TAKE TO DUBAI SANTANDER LEADS HIGH STREET BANKS IN SLASHING RATE ON CURRENT ACCOUNTI

Santander UK is to halve the in­te­rest rate on one of its most po­pu­lar ac­counts in a move other banks are ex­pec­ted to fol­low as they ad­just to ul­tra-low rates and eco­no­mic un­cer­tain­ty trig­ge­red by the Brexit vote. The bank has si­gned up more than 3m cus­to­mers to its 123 current ac­count, lu­ring them with a com­pa­ra­ti­ve­ly high rate of 3 per cent. It bla­med its de­ci­sion to slash the maxi­mum payout on the ac­count to 1.5 per cent on “in­te­rest rates staying lo­wer for lon­ger”. Lloyds Ban­king Group fol­lo­wed with a sta­te­ment saying it would “re­view” its current ac­counts, which in­clude its “Club” pro­duct that of­fers up to 4 per cent in­te­rest. Santander UK, which consi­ders it­self a “chal­len­ger” to the lar­gest high street len­ders, has been one of the most ag­gres­sive banks in pur­suing current ac­counts in a bid to at­tract cus­to­mers. It has at­trac­ted £1bn a month this year to its current ac­counts, which have an ove­rall ba­lance of £61bn. The crea­tion of the 123 ac­count in 2012 was a pi­vo­tal mo­ment for Santander UK, which ar­ri­ved on the high street two years ear­lier after buying Ab­bey Na­tio­nal, Al­liance & Lei­ces­ter and part of Brad­ford & Bin­gley. It is still one of the on­ly UK current ac­counts to charge a month­ly fee in re­turn for be­ne­fits, such as cash back on bill pay­ments, in a move to build cus­to­mer re­la­tion­ships. The bank’s de­ci­sion to cut its rate comes after the Bank of En­gland lo­we­red bench­mark bor­ro­wing costs to a re­cord low of 0.25 per cent in an at­tempt to fend off eco­no­mic slow­down fol­lo­wing the vote to leave the EU. Banks are still en­joying ac­cess to cheap funds through the go­vern­ment’s Fun­ding for Len­ding Scheme and a new £100bn pot laun­ched this month. Ana­lysts said some are poi­sed to rein in bu­si­ness loans and are fo­re­cas­ting lo­wer mort­gage growth after the vote, re­du­cing their need to chase de­po­si­tors. “The banks are loo­king at their fu­ture loan book and, post-Brexit, they can see a de­cline in new mort­gage len­ding so they don’t need as ma­ny de­po­sits,” said KPMG part­ner War­ren Mead. Near­ly three-quar­ters of current ac­counts pay a ze­ro rate of in­te­rest, ac­cor­ding to Mo­ney­facts, which tracks bank pro­ducts. The ave­rage ea­sy-ac­cess sa­vings ac­count pays 0.53 per cent, while Royal Bank of Scot­land and NatWest have said they may im­pose ne­ga­tive rates on bu­si­ness clients, in ef­fect char­ging them to put money on de­po­sit. Santander’s 123 ac­count has been a po­pu­lar choice for high ear­ners, as it pays 3 per cent in­te­rest on ba­lances bet­ween £3,000 and £20,000, gi­ving them £540 a year after fees. From No­vem­ber, that will fall to 1.5 per cent. Lloyds’ Club Lloyds current ac­count has al­so been po­pu­lar with the af­fluent, paying 4 per cent on ba­lances of £4,000 to £5,000. Lloyds did not dis­close when it would change, saying­be­cause of “mar­ket condi­tions“it would be “re­vie­wing our ac­counts in due course”.

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