Why don't HSBC offer good rates?

ian-d

As the worlds largest bank, why don't HSBC offer interest rates to match other banks?

I feel my money (larger sums than £35k) is safer with them than anyone else, yet they give me no reason to keep my money in there.

Is there any reason for it, or is it just a case of them being the largest bank and not having to!!!

Does anyone know if they have any large saver accounts planned, or would even consider a larger rate to me, who's been a positive customer of there's for many many years?

quinlanmd

You answer your own question when you say that you feel your money is safer with them than anyone else. There must be a lot of people thinking the same way across the world, hence they don't need the liquidity and would be quickly swamped with savings money if they offered market-leading rates for any significant length of time.

ian-d

Another really daft question then, as I don't know the in's and out's of how banks operate, but are high interest savings accounts not that profitable for banks? I appreciate other ventures will make them much more, but surely there's profit in it, otherwise these other banks that focus on savings only wouldn't be in business?

(told you it would sound daft, but its only easy if you know the answer!)

Cranston_2

try Abbey, for amounts over £50K you will get money market rates and Abbey owned by Santander is a very safe bank.

Jonbvn

Cranston wrote: »

try Abbey, for amounts over £50K you will get money market rates and Abbey owned by Santander is a very safe bank.

Only drawback is that their customer service is shockingly poor.;)

exel1966

and that's something of an under statement !

HSBC, one of the largest worldwide banks, and there-in lies the problem. The overheads will be astronomical and someone has to pay for that.....you the customer.

They never have been known for their headline grabbing rates and do not seem to offer loss leading accounts (high rate accounts) to reel in the custom for other accounts. Perhaps they think their customer base is large enough already ?

Steve_xx

ian-d wrote: »

Another really daft question then, as I don't know the in's and out's of how banks operate, but are high interest savings accounts not that profitable for banks? I appreciate other ventures will make them much more, but surely there's profit in it, otherwise these other banks that focus on savings only wouldn't be in business?

(told you it would sound daft, but its only easy if you know the answer!)

It's not that high interest rates are not profitable, but perhaps it could be said they they may be less so. Obviously if a bank takes your deposit and it gives you 3% interest and it then lends the money you've deposited to someone wanting to buy a house, it might be charging the borrower around 7% interest on the loan. Hence you can see that there is a 4% spread between what it gives you in interest and what it gets back for loaning your cash to a borrower. Therefore it's easy to see that banks want to give low rates of interest to depositors and ideally it would like to charge high rates of interest to borrowers. The bit in the middle, ie the 4% is the banks profit on the deal.

Crinz

ian-d wrote: »

Another really daft question then, as I don't know the in's and out's of how banks operate, but are high interest savings accounts not that profitable for banks? I appreciate other ventures will make them much more, but surely there's profit in it, otherwise these other banks that focus on savings only wouldn't be in business?

(told you it would sound daft, but its only easy if you know the answer!)

you're right in that savings arent really profitable but building a good relationship with wealthy new customers can be very profitable in the long run. People are more likely to go there bank for new products (loans, mortgages) than shop around as they feel safer with something they know

dunstonh

The reasons have already been said but no harm repeating them.

they are the largest UK bank and financially secure and dont have to buy deposits in the same way some of the other banks are.

you're right in that savings arent really profitable

The net interest charge on savings is usually around the 1.5% mark. In recent times that has fallen to around 0.8% and some banks are even worse than that as they need the cash inflows that a higher rate brings.

Some banks dont need to offer attractive rates as people just put their savings there and it grows year in year out without any effort. They have researched what happens when lower or higher rates are given and have found that it really doenst make a big difference to their customers. The smaller and/or newer banks have to offer better rates to get business.

brookerbabyisababy

what I don't understand is why First Direct (owned by HSBC) offer any good rates. They should at the very least match the rates offered by HSBC - but no.

Steve_xx

brookerbabyisababy wrote: »

what I don't understand is why First Direct (owned by HSBC) offer any good rates. They should at the very least match the rates offered by HSBC - but no.

What exactly don't you understand? Can you give an example?