People with Euro offshore savings accounts should review their interest rate as there is a growing disparity between European Central Bank (ECB) rates and offshore savings rates, according to Investec.
Investec’s Guernsey based subsidiary says the gap between average interest payments on Euro offshore accounts and the ECB base rate has reached 0.7% by the end of July 2007.
Laura Preston, of Investec Private Bank (Guernsey), recommends offshore savers examine the disparity between the rates paid on their accounts and the ECB base rate as they may benefit from switching to a different account.
At the end of April 2007, the average return of a Euro offshore account was 3.11% with an ECB rate of 3.75%, a 0.64% difference. By the end of July, the ECB rate had risen 25 basis points to 4.00% while the average savings interest had risen by 19 basis points to 3.3%, a 0.7% difference.
Furthermore, in October 2005, disparity between the ECB base rate and average offshore savings rates was just over 0.5%, indicating a change of 0.2% in less than two years.
Preston adds: “When the European Central Bank rate changes, it is very interesting to see the response from other offshore banks on their Euro offshore savings accounts. Clearly, not all banks have increased their rates immediately in line with 25 basis point rise in the ECB rate in June.“
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