Savers scrutinise loan books

by Gill Montia

Story link: Savers scrutinise loan books

According to Moneysupermarket.com, the price comparison website, savers spooked by recent events at Northern Rock are seeking to invest in banks that have relatively small loan books.

As a result, Bradford and Bingley has benefited from an influx of new savers, many of whom are choosing its instant access savings account which pays interest at 6.26%.

Bradford & Bingley has £1.63 on loan from other banks for every pound that it has on deposit, and this compares favourably with Bristol & West, Northern Rock and Standard Life Bank.

HSBC is the safest bank in terms of this ratio as it has more funds on deposit than it has borrowed, with 97p on loan to every pound in a savings account. Its instant access account pays interest at a competitive 6.25%.

Yorkshire Building Society, which has a savings rate of 5.95%, has £1.06 on loan for every pound on deposit. Barclays has £1.10 on loan for every deposited pound, and an instant access rate of 5.01%.

Savings experts are warning consumers to be cautious in transferring existing accounts to keep their money safe.

Banks with smaller loan books may not be paying the best rates of interest and when opening new accounts, consumers should also look to the penalties imposed, such as those for early withdrawal.