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Rabo cuts term deposit rates; BNZ hikes four month deposit rate
Raboplus has cut almost all of its term deposit rates by between 5 and 85 basis points in a move that contrasts with the New Zealand bank trend of rising deposit rates due to increased competition for local funds. Rabobank tends to move its deposit rates in lock-step with wholesale market rates.
Meanwhile, BNZ raised its four month deposit rate by 20 bps to 4.8% and cut its 18 month rate by 15 bps to 5.15%.
Raboplus cut all of its three month to five year deposit rates, with its six month rate, cut from 4% to 3.15%. The only rate it didn't cut was its one month rate of 3%. See and compare all deposit rates for terms less than one year here and terms one year and greater here.
Deposit rates in New Zealand have been on a rising trend in recent months as competition heats up for them to secure more local funding. The rate hikes follow revised prudential liquidity guidelines from the Reserve Bank at the end of June that require banks to raise more funds from New Zealand depositors and for longer terms.
The Reserve Bank introduced the new guidelines to try and wean the banks off their dependability on short term 'hot' money from global wholesale money markets, which can dry up during a credit crunch, as seen following the Lehman Brothers failure at the end of 2008.
8 Comments
I think Rabo have become
I think Rabo have become totally uncompetitive. They used to have good rates, I had presumed that they were able to do it by not carrying a branch network like the main street banks. But those days are gone. We had about $200k there, but whipped it out & put it into National. I do wonder what is going on at Rabo, they must be losing deposits big-time, almost everyone who banks with them will have another bank for their regular transactions.
hang on here - so
hang on here - so Rabo is placed on NEGATIVE WATCH by S&P and CUTS its deposit rates - should be increasing them.
Risk and Return in NZ is totally out of Sync
One of the reasons a
One of the reasons a bank cuts it's depo. rates is because it doesn't need the money any more. A cut back in liabilities as assets mature; no more new/renewed lending in NZ? Maybe they think it's time to cut and run.
What dose Raboplus have now?
What dose Raboplus have now? it used to have good rates,to be competitive, I will put my money to National bank of NZ if it keeps getting worse.
Terracotta Warriors
Nicholas: Yes, that has been
Nicholas: Yes, that has been my suspicion. Either they are getting out of NZ & using the residual depositers as a cash cow in the meantime (no incentive to provide competive rates if you are clearing out), or else they are in some sort of trouble & are needing to max their margins. They are always skiting that all of their $$ goes into NZ farming. I wonder.........
T Warriers: http://www.raboplus.co.nz/current-rates.aspx. Not impressive
The problem Rabo likely has
The problem Rabo likely has is that they have been pricing a large chunk of their farm lending off wholesale rates. (This is common across a number of the banks.) A number of larger farmers out there are on rates of 4.50%-5.00%. This was a big woopsy by the banks but has helped cushion the lower commodity prices for farmers (and therefore our economy.)
These low lending rates means Rabo needs to keep deposit rates as close to "wholesale" as they can to make a profit. In the meantime bank term deposit rates are at least 2% above wholesale which Rabo cannot compete with. Rabo doesn't have the luxury of cheap inelastic transaction and savings balances. It has hot deposit money that will now be running out the door.
I'd imagine its NZ operation will be losing significant $$. The only issue this will create will be for local management bonuses and job security.
I don't know how the new RBNZ rules on domestic funding apply to Rabo but they certainly won't have problems raising relatively cheap offshore funds. NZ is a tiny exposure for them.
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