An expected overhaul of basic deposit products to meet the new liquidity regime is taking its time to work its way through the industry, Guy Debelle, assistant governor for financial markets at the Reserve Bank of Australia, suggested at an industry conference yesterday.Earlier aspects of the significance of the new liquidity coverage ratio - a regime formally in place from the start of 2015 - are manifest in the sector.The banking sector's "process of paying higher deposit rates has largely run its course," Debelle said.Other features are making a more moderate impact."There have been some changes in the mix of deposit rates and products as a result of the introduction of the LCR," Debelle said."Banks have an incentive to reduce the amount of liabilities that roll off in less than 30 days. Deposits which are deemed to be subject to high run-off rates and those which are callable within 30 days will be more expensive for banks," he said. "Banks are therefore working towards converting many of these less stable deposits into a more stable deposit base.""Interest rates offered on new or existing deposit products which are deemed to be more stable are rising relative to interest rates on products deemed to be less stable."These types of changes appear to have accelerated recently as we draw closer to the implementation of the LCR and probably still have some way to run."

Debelle said "to date, we have seen only a few banks offer notice of withdrawal accounts to customers. These accounts require the depositor to provide the bank with 31 days or more notice of a withdrawal."RaboDirect, Westpac Investec Bank Australia and AMP Bank are among those banks to introduce these products."Interest rates offered on these accounts are among the higher rates offered in the deposit market," Debelle said."It may be that we see a broader move to these types of accounts or changes in terms and conditions on existing accounts through the course of next year."