Business deposits attract attention

It is businesses, rather than households, that are proving sensitive to the attractions of smaller banks and foreign banks as alternative custodians of their deposits.

Banks in Australia collected $60 billion extra in deposits from households and business over the last year.

In household deposits, few banks are growing their deposits far out of line with system. Three exceptions are Rabobank, which doubled its book over a year but is yet to reach $2 billion; ME Bank, with a small book still, of $1.3 billion; and Bank of Cyprus, with a book only just approaching $500 million.

A fourth is National Australia Bank, where growth rates of six per cent over six months and 12 per cent over 12 months is a modest return for its efforts in dropping a number of annoying bank fees, and forcing other banks into lowering (though not removing) the same fees.

Trends on business deposits are more lively.

Nine banks are reporting above-average growth over the six and 12 months, where system growth is five per cent and seven per cent respectively.

Growth rates for six of them range from 20 per cent to 60 per cent, depending on the bank and whether it is the half or full year period.

ME Bank, from slight beginnings, is the fastest growing bank in business deposits, with money largely flowing from associated superannuation funds.

HSBC bank reported growth of 19 per cent over six months and was up 58 per cent over 12 months, with a book of $6 billion.

Not so far behind, by rate of growth, are ING, Macquarie and Investec.

Commonwealth Bank was the only major bank to report above-average growth in business deposits.

Over the last six months Westpac reported no growth in this segment.

The Australian Prudential Regulation Authority published its monthly banking statistics on Friday.