Standard Life puts up savings rates

Competition for the nation's nest-egg money stepped up a gear yesterday when Standard Life Bank announced it was bucking the rate reduction trend by increasing some of its savings rates.


The move comes as former building societies Halifax and Abbey National indicated that savings rates may fall again soon following the latest quarter-point base rate reduction.


All established and new 50-day notice account savers with Standard Life Bank - the telephone banking arm of the insurer - will see interest rates increase by up to 0.46% gross on Monday.


Standard Life Bank went live in January 1998 and has been one of the most successful of the new entrants to the market, attracting more than ?2.5bn in deposits from about 200,000 account-holders. Most of these have signed up for its direct access savings account, rates for which are being kept on hold. There are more than 30,000 50-day notice account customers.


Some high street rivals dismissed the announcement as a publicity-seeking move, but managing director Jim Spowart denied that the bank was resorting to 'loss leader' tactics. He said that instead of cutting its mortgage rate by 0.1 of a point, as other institutions have done, Standard had decided to pass on an equivalent reduction to its savers.


The new 50-day notice account rates vary from 5.55% gross to 6% gross per annum. Those people investing up to ?9,999 will see the smallest increase - from 5.45% to 5.55%. Savers with ?10,000 to ?24,999 invested will enjoy the biggest increase - from 5.5% to 5.96%.


Among the other new entrants, Virgin Direct has kept its deposit account savings rate unchanged at 5.75% gross while Egg, the direct banking arm of Prudential, said that there were no immediate plans to change its 6% gross rate on deposits.