Internet bank defends interest policy

Internet bank ING Direct (NYSE: ING; Euronext: INGA) has lost customers over its refusal to pass on two interest rate increases, in November and January, to its account holders. And, while it now says that it will pass on the most recent rate increase to savers beginning 1 June, that will leave its standard savers’ rate at 5 percent, still around half a percent lower than its rivals. The online bank attracted customers when it opened for business in the UK, in 2003, by offering an interest rate that was over half a percent higher than the Bank of England’s base rate and 0.3 percent higher than its rivals.

ING defended its interest rate policy by pointing out that it pays all its customers the same rate, which other banks do not, in order to be fair to all its customers. A spokesman said that the bank did not and does not want to get into a competition of trying to stay ahead of other banks in the interest rates it pays savers. The spokesman also claimed that most of the customers who had changed banks were those with substantial accounts that would benefit most from higher rates offered by other banks.

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