[SINGAPORE] Savers are finally getting some respect, as banks ramp up their deposit campaigns amid a continued fall in deposits.
Banks are paying relatively higher interest rates - with conditions attached, of course - but you no longer have to be rich as Croesus to reap this interest.
This month, OCBC Bank launched a major salvo in the war for deposits, offering to pay 3.05 per cent for balances of up to $50,000 if depositors do three things on its 360 account - credit their salary, make at least three Giro payments and spend at least $400 on a credit card every month.
The OCBC 360 Account has upped the ante on rival DBS Bank's Multiplier programme launched last month.
The Multiplier pays up to 2.08 per cent for one’s savings; to earn it, the bank will recognise the combined cash flow from any of the four: salary credit, investment dividends from the Central Depository, mortgage instalments and credit card bills.
Lim Wyson, OCBC's head of global wealth management, said more than 5,000 customers have signed up for its 360 account since the start of the month; three in 10 opened accounts with fresh funds.
Mr Lim said: "The objective behind the enhanced OCBC 360 Account is to deepen our relationship with our customers by rewarding them when they do more with us."
Banks here need to attract more deposits to fund their loans; loan growth has eased, but still rose 14.6 per cent year on year in February, the latest month for which data is available.
Deposits have slumped faster: In February, deposit growth shrank to 1.9 per cent year on year from 4.4 per cent last November, and 8.3 per cent in January 2013.
Deposits in banks comprise three components - savings, demand deposits (DDs) and fixed deposits (FDs).
Growth in savings and DDs has fallen to single digits, but FDs, the single largest component, have plunged deeper into negative-growth territory, almost minus 6 per cent.
The loan-to-deposit ratio, at 108 per cent in February, was the highest since May 1998. The record high was in October 1997, when it was 115.6 per cent.
To tackle the slide in FDs, banks have increased their payouts and no longer insist on huge amounts to earn at least 1.0 per cent.
United Overseas Bank pays 1.20 per cent, the highest FD rate in two years, for an 18-month deposit starting at $20,000.
OCBC said that, to earn 1.05 per cent, the customer will have to place fresh funds of between $5,000 and $50,000 for a period of 18 months.
Maybank offers 1.28 per cent for a 24-month FD of at least $60,000, and HSBC, one per cent for a three-month FD and 1.18 per cent for 12 months for amounts from $50,000.
ANZ launched a new promotion with its instant-interest time deposit two weeks ago. For $150,000 and above, it is offering 1.10 per cent on a seven-month tenure; the interest is paid in full to the customer's current or savings account the day the funds are placed.
An ANZ spokeswoman said that when the instant-interest time deposit was launched a year ago this month, it exceeded its new-client acquisition target by 125 per cent.
The bank has pulled in $190 million in deposits with this product in a year. The average deposit amount was between $200,000 and $300,000, reflecting the bank's target segment of affluent customers, she said.
Philip Lim, ANZ's head of retail banking here, said: "With the recent cooling measures on property and cars, clients' perspectives and priorities on discretionary income have shifted, and they are less willing to take risks with complex investments. They are also more cautious with their money and may decide to postpone big purchases in order to channel their finances into safer options such as savings or time deposit accounts, despite the usually low interest rates."
Harmander Mahal, HSBC Singapore's head of customer-value management, retail banking and wealth management, said cash deposits have become core to people's financial portfolio as they focus on protecting their capital and preserving liquidity.