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oldsport

Do Banks Not Want Savers Anymore?

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My ISA with Birmingham Midshires is maturing. They don't have any new ISAs for me to apply for. If I don't transfer my money to another provider it will be put in an account at 0.5%. When I looked on their website I saw they not only have no ISAs but only have one savings account of any sort - a 1 year fixed bond - not even an instant access account. When I spoke with a couple of customer service people to ask what my options were I also asked if they would be offering any more savings accounts in the near future - but they had no idea.

BM Savings Selection

It just seems strange for a bank.

Do they have so much funny money from the government that they no longer need savings?

Edited by oldsport

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I must have been lucky for a change. My 2 year (3.8%) ISA with BM matured on 6th Jan and they offered me an 18 month one at 2%.

I must have just missed that by a few weeks!

I'm moving it to Virgin who were very helpful - but I'd rather have kept it where it was.

EDIT - although I probably would have wanted more than 18 months - gone for a 3 year at 2.4% in the end

Edited by oldsport

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Do they have so much funny money from the government that they no longer need savings?

IMO, not quite.

My guess would be that retail savings make sense as a way of funding a bank balance sheet provided only wholesale funding is sufficiently expensive.

As Birmingham Midshires (BM) is Lloyds Bank's captive BTL lender, BM has access to the global money markets. Hence when Fed intervention pushes down Treasury yields in the US it makes it cheaper for BM to fund their balance sheet from the wholesale markets and reduces the need for them to offer attractive savings rates to tap a disproportionate share of the UK retail savings market, (hence no ISA product). Others should feel free to dismantle this surmise where it is weak...

Thus this is the globalisation of capital in action, (again). BM don't need to borrow from you because someone else will lend. The 'funny money' which is driving down the interest rates on your savings is Dollar funny money being printed at a rate of $75bn a month by the Fed.

Still pretty sure that this doesn't end well.

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The Halifax are really ramping ISAs. On multiple occasions over the last year I log in and get halted on my way to look at my accounts by a page telling me how good ISAs are.

Since I haven't taken any interest - when I log in now, I see my current account, my savings account (I don't use it for savings, it's just a convenience to have two separate ledgers) and my ISA account.

I don't have one. I thought at first that they'd opened one for me anyway. On closer inspection where the "VIEW ACCOUNT" button would be, I see one saying "APPLY" but the presentation of it is designed to make you click through and do just that. It looks as though you already have it anyway, you just need to "enable" it.

So they seem pretty keen on me opening that account.

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IMO, not quite.

My guess would be that retail savings make sense as a way of funding a bank balance sheet provided only wholesale funding is sufficiently expensive.

As Birmingham Midshires (BM) is Lloyds Bank's captive BTL lender, BM has access to the global money markets. Hence when Fed intervention pushes down Treasury yields in the US it makes it cheaper for BM to fund their balance sheet from the wholesale markets and reduces the need for them to offer attractive savings rates to tap a disproportionate share of the UK retail savings market, (hence no ISA product). Others should feel free to dismantle this surmise where it is weak...

Thus this is the globalisation of capital in action, (again). BM don't need to borrow from you because someone else will lend. The 'funny money' which is driving down the interest rates on your savings is Dollar funny money being printed at a rate of $75bn a month by the Fed.

Still pretty sure that this doesn't end well.

Exactly, QE throughout the west means that bankers dont actually need people to invest in them...bankers save borrowing costs, but that in turn means that people with capital ( surplus cash or savings) are the ones that pay for it all.

The ultimate upshot of this is that your savings are worthless, our cash is worthless and the system is busted....a system that generates cash to provide itself with cash but no real wealth required is perpetual motion....and as we all know, that CANNOT exist.

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My ISA with Birmingham Midshires is maturing. They don't have any new ISAs for me to apply for. If I don't transfer my money to another provider it will be put in an account at 0.5%. When I looked on their website I saw they not only have no ISAs but only have one savings account of any sort - a 1 year fixed bond - not even an instant access account. When I spoke with a couple of customer service people to ask what my options were I also asked if they would be offering any more savings accounts in the near future - but they had no idea.

BM Savings Selection

It just seems strange for a bank.

Do they have so much funny money from the government that they no longer need savings?

My financial adviser chappy who deals with my draw down pension tells me you can put spare cash into managed ISAs. His firm will invest the funds and you only pay tax on any profits above the ISA tax threshold (about 11,500 GBP total in savings). Also, they are flexible and you can draw funds out at any time. He reckoned, after their fees, you can make about 7%. This is probably long term though, and probably a minimum of 3-5 years.

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My financial adviser chappy who deals with my draw down pension tells me you can put spare cash into managed ISAs. His firm will invest the funds and you only pay tax on any profits above the ISA tax threshold (about 11,500 GBP total in savings). Also, they are flexible and you can draw funds out at any time. He reckoned, after their fees, you can make about 7%. This is probably long term though, and probably a minimum of 3-5 years.

What on earth is he waffling on about?

You're taxed on income *before* it goes into an ISA wrapper (unless it's generated from within the ISA wrapper).

7%. Hmmm. And it won't be risk-free (if anything is). Or guaranteed.

Whatever it is he's selling it has no comparison with a cash ISA with a high street bank or building society.

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What on earth is he waffling on about?

You're taxed on income *before* it goes into an ISA wrapper (unless it's generated from within the ISA wrapper).

7%. Hmmm. And it won't be risk-free (if anything is). Or guaranteed.

Whatever it is he's selling it has no comparison with a cash ISA with a high street bank or building society.

I'm talking about using savings, so have paid income tax on it already. There will be no more tax to pay, only on interest above the ISA threshold. Nothing is guaranteed, but looking at the figures for the past few years, the figures look reasonable. After all, the insurance companies are paying out a similar percentage for annuities which would tend to back-up the likely performance of a draw-down pension. And like I said, it is a long term thing. So if all goes according to plan, it will be miles better than the high street,

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IMO, not quite.

My guess would be that retail savings make sense as a way of funding a bank balance sheet provided only wholesale funding is sufficiently expensive.

As Birmingham Midshires (BM) is Lloyds Bank's captive BTL lender, BM has access to the global money markets. Hence when Fed intervention pushes down Treasury yields in the US it makes it cheaper for BM to fund their balance sheet from the wholesale markets and reduces the need for them to offer attractive savings rates to tap a disproportionate share of the UK retail savings market, (hence no ISA product). Others should feel free to dismantle this surmise where it is weak...

Thus this is the globalisation of capital in action, (again). BM don't need to borrow from you because someone else will lend. The 'funny money' which is driving down the interest rates on your savings is Dollar funny money being printed at a rate of $75bn a month by the Fed.

Still pretty sure that this doesn't end well.

Up to a point.

The cheapest term money around is under the FLS and it has a 3-year term so it is preferable to retail deposits.

However, the days of being able to fund a bank's long-term assets off of 3-month deposits are long gone. Although prices have been coming down, it is still quite expensive to get 3-year debt on the unsecured markets. 3-month debt can be had for next to nothing, but the regulators do not allow banks to take on a lot of it.

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And of course inflation is 3 or 4% (actual on stuff you buy) so a net loss if you save and Dave says he wants to encourage people to save.

No he doesn't. Thats the last thing he wants. He wants you out spending in his mates shops, or preferably buying his mates over priced houses. :rolleyes:

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No he doesn't. Thats the last thing he wants. He wants you out spending in his mates shops, or preferably buying his mates over priced houses. :rolleyes:

....yes saving is bad, spending and borrowing is good........will be alright, got a triple lock pension guarantee that will provide for all our needs, inflation and debt accumulation, your country needs your savings. ;)

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C&G is similar.

I suspect it's more to do with the Lloyds debacle.

Letter from C&G on ISA maturing in a nutshell says 'our rates are crap, we really think you'd be better off elsewhere'.

They were correct.

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Here's another one to add to the list - Monmouthshire Building Society wrote to me last week to say they wouldn't accept deposits into any of their ISAs after March. Anyone who wants to carry on as a cash ISA saver has to register for a new account, new passbook and everything else. Almost as if they don't want anyone to bother.

The details on their website didn't make it any clearer to me why they decided to do that, so its good to hear people's thoughts here on other building societies and why they don't seem to want their savers any more.

Something I wondered was whether this was a glimpse of the slow motion crash people sometimes talk about - I mean rather than all the banks freezing up and stopping savers from accessing their accounts as was apparently the threat in 2008, we've found ourselves in a slower, 5 year freeze up where savings interest rates went down, then they went below inflation, then they went down to levels you could barely call interest at all and now the accounts themselves are starting to vanish.

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Looks like the banks are happy to erode their deposit base as they can rely on the cheaper (this week) wholesale markets. It's a good job uninterupted cheap money is constantly on tap, or we could be looking at the first bank run in this country since 1866.

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Something I wondered was whether this was a glimpse of the slow motion crash people sometimes talk about - I mean rather than all the banks freezing up and stopping savers from accessing their accounts as was apparently the threat in 2008, we've found ourselves in a slower, 5 year freeze up where savings interest rates went down, then they went below inflation, then they went down to levels you could barely call interest at all and now the accounts themselves are starting to vanish.

Well 5 years ago, one of the main themes was more recent buyers had been tricked into buying at super high prices and had no personal responsibility for taking on huge mortgages, pushing up house prices to extremes. That theme ran and ran, even into 2009 and the reflation of house prices, with many still feeling the same way.

The very same owners who look down on non-owners and say renting is dead money, not to blame, and to be protected. Apparently it's all the crash is all the collective responsibility of non-owning savers. And the reflation the duty to been overseen by non-owning savers.

We continue to keep paying for victim house buyers, conveniently locking in massive value for older equity rich owners. You can't have hpc and protect those who chose to buy at very high prices, so I don't see how many people can complain about low interest rates for savers, when they were all about protecting over-indebted, with excuses how they were tricked by media, what their parents told them about house prices doubling every few years, and every other excuse to rush to huge mortgage debt.

House prices rising across the UK, says ONS

14 January 2014

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