High St saving rates higher from a bank than building society on 12 month bonds.

soros

I have been quite surprised recently to see that the banks (2 that I am aware of) are offering a higher rate of interest on 12 month bonds than building societies generally are.

I have never known this happen prior to the last few months. At the moment I am likely to be reinvesting my savings with a bank not a building society when my account matures very soon.
　

dunstonh

I have never known this happen prior to the last few months.

Since banks and building societies were allowed to compete with each year, it has happened a large number of times. Prior to that, banks couldnt beat building societies by default. However, we are going back some decades now.

RetiredInThailand

Most of the banks are pretty keen (read desperate) to increase their core capital ratios. So they are paying high rates to attract long-term deposits. Most of the BSocs dont have this problem, so they are paying less.
It's as simple as that.

calypso_rhapsody

Why does it matter? i always go for the best rate - whether bank or BSoc ... and can't say i have noticed the trend you mention because it doesn't matter to me - provided it is FSCS covered i don't really care!

VT82

RetiredInThailand wrote: »

Most of the banks are pretty keen (read desperate) to increase their core capital ratios. So they are paying high rates to attract long-term deposits. Most of the BSocs dont have this problem, so they are paying less.
It's as simple as that.

Erm, not quite.

Core capital ratios are based on the amount of loss absorbing capital (on which retail savings have no impact), divided by risk weighted assets (on which retail savings have no impact). Also, building societies will have more of a problem with capital (well, over the long term anyway), because they have no practical way of raising capital, apart from relying on their profits growing.

Where banks are going to struggle compared to building societies is in raising their liquidity levels, which is where retail savings, particularly long term stuff, will be increasingly important for them. There is a road map in place for reaching the liquidity levels which will be required under new regulations - building societies are smaller, so were given less of a hurdle to reach where they needed to be in terms of liquidity levels. As they were already nearly where they needed to be, they have been expected to get there pretty soon. Banks, however, were miles away from where the regulation says they'll need to be, and the FSA has continually been letting lag behind. This is changing.

RetiredInThailand

A rose by any other name ....

It still looks like the banks are desperate for long-term deposits to me, regardless of which part of their books they want to strengthen with them.

soros

calypso_rhapsody wrote: »

Why does it matter? i always go for the best rate - whether bank or BSoc ... and can't say i have noticed the trend you mention because it doesn't matter to me - provided it is FSCS covered i don't really care!

It doesn`t matter, not to me at least. It is just that whenever i had looked around for favourable rates before i had only ever looked at building societies. Now banks are included in my searches.