NEWS | Wednesday, 10 December 2008

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HSBC announces change in base rate

HSBC Malta yesterday announced a reduction in the base rate for all lending rates to 3%, except for home loans, after the European Central Bank announced a further 0.75% cut last week – the third cut in months.
Hot on the heels of exhortations by both Central Bank and ECB member Michael Bonello and Finance Minister Tonio Fenech to give banking customers their full 175-point reduction in rates, HSBC yesterday said it would reduce its home loan base rate to 2.75% from 3.35% – 60 points in total.
The revised base rates are effective as from Wednesday 10 December 2008.
HSBC also left a number of its core saving rates unchanged in spite of the reduction in the ECB Intervention Rate, saying this will encourage savings and ensure the funding base for banks in Malta remains strong in spite of the low interest rate environment.
Yesterday HSBC said that with the majority of the significant rate cuts being passed on to HSBC personal and corporate customers, the bank was balancing both the requirements of its saving and borrowing customers. “Interest rates will continue to be closely monitored and will be adjusted in the light of market conditions including possible further ECB rate reductions, the cost of wholesale funds and HSBC’s assessment of credit risk in line with Malta’s economic performance,” the bank said.
HSBC also retained its higher rate on its online savings account at 3% for balance of over €5,000. Term Deposit rates for 2, 3, 4 and 5 years were reduced by less than the reduction in ECB interest rates, to 2.5%.
In comments to MaltaToday, Bank of Valletta yesterday said it was currently analysing the interest rate reduction announced by the ECB and would be making the appropriate adjustments in its interest rates in the coming days.
Addressing banks directly at the annual dinner of the Institute of Financial Services, Central Bank governor Michael Bonello said banks were expected to make their contribution in restoring confidence. “With bank lending rates in Malta being generally set with reference to official policy rates, I would, therefore, expect bank customers, particularly those whose borrowings promise most to support domestic economic activity, to benefit fully from the recent ECB rate cuts, which have totalled 175 basis points.”
Both major banks had reduced their interest rates after the ECB decision to reduce its interest rate for the second time in November from 3.75% to 3.25%, with HSBC cutting 40 points from its home loan base rate while BOV cut its home loan rate to 3.45%.

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