Landsbanki’s Icesave account faces tough competition

| February 13, 2008 | 0 Comments

Icelandic-owned Landsbanki launched its Icesave account back in October 2006 but faces tough competition from other foreign banks.

The Icesave account has been pushed further down the best-buy tables following the arrival of Icelandic-owned Kaupthing Edge. Other foreign banks entering the British market include Nigerian-owned FirstSave, Icelandic Icesave, ICICI of India and Dutch-owned ING Direct.

This week saw the Icesave account’s rate cut from 6.3% to 6.05%. The rate on the Icesave internet-based monthly income account also fell from 6.13% to 5.89%.

Currently at the top of the chart with excellent rates is Kaupthing Edge’s instant-access savings account which pays 6.5% gross and offers a 6-month fixed-rate bond at 6.8% gross and a 12-month fixed-rate bond at 6.86% gross. Following closely behind is Indian-owned ICICI’s HiSAVE account at 6.41%.

Last week, the Bank of England lowered rates from 5.5% to 5.25% but Kaupthing Edge announced that it was retaining its saving rate at 6.5%. Two of the smaller building societies, Cumberland BS and Chesham BS also announced that they would not be reducing their savings rates.

Indian-owned ICICI bank has yet to announce how it will react to the latest bank rate cut.

Susan Hannums of financial adviser, AWD Chase de Vere, said following the last couple of rate reductions we have seen some strange reactions in that some providers just haven’t reacted. This could be due to the highly competitive market after the credit squeeze with huge demands for money from UK banks.

Icesave is no longer the new kid on the block, however, it still has a good easy access account with a great guarantee, added Ms Hannums.

The rate on the Icesave account is guaranteed to be at least base rate plus 0.25% until October 1, 2009 and then at least base rate until October 2011.

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