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Banks Attracting More Deposits

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NU Online News Service, March 1, 6:35 p.m. – Investors seem to be depositing more of their cash at banks, according to an analyst at Standard & Poor’s, New York.

Core deposit growth increased to about 9.2% in 2001 from 5% in 2000, according to a report by Tanya Azarchs, a managing director in the financial services unit of S&P.

Many other products offering havens from stock market volatility also did well in 2001. Life insurers, for example, have reported enormous increases in sales of fixed annuities.

But banks, in particular, seem to be doing a better job, Azarchs says.

“Banks have now become more competitive from a deposit pricing perspective,” Azarchs says, pointing to the fact that the spreads on longer-term deposits are widening.

If banks want to continue to increase deposit growth, they will have to continue to improve prices, because, even in times of market volatility, investors will always compare rates on bank savings products with rates on other safe financial products, she says.