Clydesdale and Yorkshire banks launch market-leading bonds
Two banks have launched an attack on the savings market with a range of fixed-rate bonds, which will bring a smile to the faces of savers.
Clydesdale and Yorkshire banks have released four new bonds, which have put them at the top of the one, two, three and five-year bond tables.
The new bonds include a one-year bond with a rate of 3.60%, a two-year bond paying 4.0%, a three-year bond paying 4.30% and a five-year bond with a rate of 4.70%.
Those are all very attractive rates for savers who've had to put up with piddling interest rates over the last few years, although none of them beat inflation which is currently 5.6%.
It's highly unusual for a bank to launch an attack on four best-buy tables like that, but the reason for Clydesdale and Yorkshire banks' sudden generosity stretches beyond simple goodwill.
Their owner, National Australia Bank (NAB), has publicly stated that it wants to increase its presence in the UK market. "I am pouring all my energy into organic growth," says NAB's UK chief executive David Thorburn.
Given that the UK savings market is worth £1.1 trillion, it's hardly surprising NAB want a bigger chunk of the pie.
NAB's move hasn't gone unnoticed by other banks with Kent Reliance Building Society releasing a one-year bond with a rate of 3.6% and a lower minimum investment of just £1,000 – all the Yorkshire and Clydesdale bonds have a minimum investment of £2,000.
An increase in the general level of prices that persists over a period of time. The inflation rate is a measure of the average change over a period, usually 12 months. If inflation is up 4%, this means the price of products and services is 4% higher than a year earlier, requiring we spend and extra 4% to buy the same things we bought 12 months ago and that any savings and investments must generate 4% (after any taxes) to keep pace with inflation. Since 2003, the Bank of England has used the consumer prices index (CPI) as its official measure of inflation (see also retail prices index).
This is a mutual organisation owned by its members and not by shareholders. These societies offer a range of financial services but have historically concentrated on taking deposits from savers and lending the money to borrowers as mortgages, hence the name. In the mid-1990s many societies “demutualised” and became banks. One academic study (Heffernan, 2003) found demutualised societies’ pricing on deposits and mortgages was more favourable to shareholders than to customers, with the remaining mutual building societies offering consistently better rates. In 1900, there were 2,286 building societies in the UK; in 2011, there are just 51.