Daily Mail

Santander slowdown after its 123 deal is cut

- by James Burton

THE boss of Santander has defended slashing interest rates on its popular 123 current accounts after a plunge in new customers.

The lender cut rates from a market-leading 3pc to 1.5pc in September, upsetting savers struggling to beat inflation.

Results for the first half of 2017 show just 43,000 accounts were opened, down from 276,000 in the same period last year. Part of this fall is because Santander has scrapped its 123 credit card.

UK chief executive Nathan Bostock insisted the interest cut was the right decision after the Bank of England cut its base rate to 0.25pc following the Brexit vote. He said that few 123 customers had left, and the rate was still better than rivals’.

The average easy access rate is just 0.36pc, according to advice firm Savings Champion.

Bostock said that the overall value of deposits was up, showing the account was still valued highly by its 5.2m holders.

He said paying 3pc interest was not sustainabl­e at present, but hinted this could be reexamined if the base rate rose.

He said: ‘We would always look at where rates are. It’s generally not our intention to be changing the rate regularly.’

Meanwhile, Santander cut back on loans amid fears over Britain’s debt binge. Total mortgage lending dropped to £11.6bn, down £1bn from the same period last year. And consumer finance such as car loans and credit cards was cut from £266m to £97m.

Santander’s UK profits fell 1pc to £1.1bn, and it set aside £69m for PPI mis-selling compensati­on. Its Spanish parent group made £1.6bn profit in the three months to June 30.

Newspapers in English

Newspapers from United Kingdom