ING loses out on interest payment failures
Banks are commonly criticised for failing to pass on interest rate rises with any haste – but for Dutch bank ING Direct, the failure to pass on no less than two interest rate rises to customers has lost them almost 15% of their assets.
While interest rates remained low, ING’s 4.5% savings rate looked very attractive. But with UK interest rates now at 5.5% and further rate rises expected, ING customers have been moving out en masse.
Announcing their Q1 results, ING revealed that more than £3 billion had been removed from ING funds by disgruntled customers, reducing the company’s overall fund value from £24.8 to £21.6 billion between December 31st and March 31st.
While ING are trying to put a brave face on the matter, the fact is that they have become complacent in a market that is becoming increasingly competitive. Customers have traditionally saved with ING because the savings rate was considered one of the best, but now it is no longer in the running for that accolade on a rate-only basis.
However, it remains to be seen whether the recorded outpouring of fund assets will continue to damage the company, or whether customers most likely to shop around have already gone.
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