They say some banks may be scrambling to stockpile cash just in case the global banking system seizes up again as it did in 2008 and 2009.
Source: The Straits Times© Singapore Press Holdings Limited. Reproduced with permission
BANKS here, especially foreign ones, are getting into the seasonal spirit by offering higher interest rates on deposits as they usher in Chinese New Year.
But some market watchers say the banks' motives for handing out 'red packets', to gain a share of the deposit pie after bonus season, may be far from festive.
They say some banks may be scrambling to stockpile cash just in case the global banking system seizes up again as it did in 2008 and 2009.
Banking analyst and head of research at CIMB, Mr Kenneth Ng, said: 'There is an aggressive hunt for deposits. Banks are offering rates considerably higher than the Singapore Interbank Offered Rate (Sibor), especially the foreign banks.'
Yesterday, the Sibor - the rate at which banks borrow Singdollars from each other - was 0.3925 per cent. Offering interest rates on deposits higher than Sibor means that banks are paying a premium for the deposits.
Mr Ng said: 'The local banks are still flush with Singdollars, but they may have to try to match their competitors to keep their deposit pool.'
However, DMG analyst Leng Seng Choon believes that there is little danger the banking system will freeze up
'The banks are probably looking to lock in deposits for a longer time frame, which may mean they have a better ability to lend,' he said.
Among the attractive offers even before the Year of the Dragon arrives, HSBC is offering 0.8 per cent and 1 per cent a year for eight and 12-month Singdollar and US dollar term deposits.
Fresh funds of at least $25,000 and up to $5 million in either currency, deposited from now until Feb 29, will enjoy the promotion.
United Overseas Bank (UOB) customers who place an additional sum of $10,000 from now till Feb 29, can enjoy an interest rate of 0.628 per cent a year.
While these rates may sound low - well below inflation - they are significantly higher than regular rates.
UOB also has an offer on a structured deposit, ending on Feb 4, which requires a minimum investment of $80,000 and has a tenor of five years and 11 months. The total minimum guaranteed interest is 6.18 per cent, and there is a up to 6 per cent variable interest at the point of maturity, depending on how five selected Singapore shares perform.
Last week, ANZ Bank launched its Step-Up Time Deposit programme, which allows customers to earn up to 1.5 per cent interest rate, if at least $150,000 is held to maturity of 12 months.
An ANZ spokesman said: 'Despite uncertain economic conditions, ANZ remains one of the strongest banks in the world. We are well-capitalised... So it's really from this position of strength that we're able to serve our affluent customers in Singapore.'
Other than the more favourable interest rates, other Chinese New Year goodies such as abalone are also in store for savers.
DBS Bank has a Dragon Renminbi Plan, which is a five-year yuan-denominated single premium endowment plan. Those who sign up from now till Feb 29, will receive a Dragon year coin set.
At OCBC Bank, the first 1,000 customers who deposit at least $68,000 will receive a two-piece abalone gift set. The first 380 who deposit $368,000 or more, will receive the six-piece abalone set.
Customers stand to win prizes in a lucky draw for every $20,000 deposited in a Savings or Current Account.
Maybank is also giving out an abalone set worth $68 to customers who deposit a minimum of $80,000 of fresh funds in their Privilege Plus Savings Account by Feb 29. Children who place their hongbao money of at least $5,000 into Youngstarz, a junior savings account, will receive shopping vouchers or more cash from the bank.
A Maybank Singapore spokesman said: 'This is the period when employees receive their year-end bonuses and kids get their hongbaos.
'The promotional gifts that Maybank Singapore offers are usually well sought after as it does come in useful for their own consumption or as gifts during this festive occasion.'
[email protected]
Background story
What some banks are offering
HSBC
Enjoy 0.8 per cent and 1 per cent per annum on eight- and 12-month Singdollar and US dollar term deposits.
Fresh funds of at least $25,000 and up to $5 million in either currency, deposited from now until Feb 29, will qualify for the promotion.
UOB
Customers who place an additional sum of $10,000 from now till Feb 29, can enjoy an interest rate of 0.628 per cent a year. The $10,000 can be deposited incrementally throughout the promotional period.
ANZ
Interest rates that increase at the end of every three-month cycle, starting at 0.7 per cent for the first three months, and up to 1.5 per cent for the fourth quarter, if at least $150,000 is held for a 12-month tenor.
Different rates apply for amounts less than $150,000.
OCBC
The first 1,000 customers who deposit at least $68,000 will receive a two-piece abalone gift set. The first 380 who deposit $368,000 or more, will receive a six-piece abalone set.