offshore banking

denboy1739

I have currently hold a barclays 3 monthl treasury account which up to now has made reasonable returns.
Now that the base rate is down to.5% it is rather dismal future prosect. Talked to the bank and all they seem to be able to offer with any reasonable return is a 5 year account.
I cannot understand how other banks can make offers like 3% on a fixed 12 month term whereas a hugh bank like Barclays refuse to do so.

Can anyone shed a light on this issue.

khana

To be able to offer high rates, the banks involved either have to have used a crystal ball and arranged to place funds elsewhere a long time ago (and therefore are receiving a better return for that deposit then they are offering their customers now), or they are desperate for cash (to lend on at a higher rate to borrowers), and are willing to reduce their profit margin by offering a comparitively high rate to savers.

A good business model for a bank is to offer competitive interest rates to savers and the same again to borrowers (but not market leading rates).

Unfortunately, most banks just saw the high profit available to lend funds, and that's partially whats created all this credit cruch mess. If the rate they offer is low, then savers will look elsewhere and they therefore don't have the funds to lend on.

If a financial organisation is offering a fantastic interest rate then I would be wondering why, and how they are managing to do it.

The prudent bank is now only lending on what they already have on deposit, after all, would you be happy to take on long term borrowing in this current unstable job market ?.