ING losing direction

After bank holiday Monday, many Sydney bank workers were greeted on their first day of the working week by the ING Direct marketing campaign, which scaled the lofty heights of tying balloons to the city's stop lights and employing out of work backpackers to hand out paraphernalia advertising the current promotional eight per cent at-call deposit rate.

ING Direct is attempting to reverse the tide of funds flowing from the once market leader, with the deposit book falling for five of the past six months, according to Australia Prudential Regulatory Authority household deposit statistics.

The increased promotional rate of eight per cent began back in June, effective to the end of September, is a fantastic rate of return considering the 18 point drop in 90 days bills to 7.57 per cent in the week to Monday, but still lags the BankWest TeleNet Saver promotional rate of 8.5 per cent - applicable to the end of the year.

The AMP eASYSaver currently pays 8.25 per cent, with the St George directsaver pays 8.1 per cent.

ING Direct have been milking their deposit book in recent years, increasing deposit rates at a slower speed than its rivals, and is now scrambling to catch up. In the two years to June 2008, ING Direct's deposits have increased just 7.5 per cent to $16.8 billion, and on a smaller timeline have fallen three per cent or around $510 million since December 2007.

In contrast, BankWest has grown its share of household deposits by 40 per cent in the last two years to $13.5 billion, and five per cent in the last six months, supporting claims the promotional rate offers do drive deposit growth. At the big end of town, Commonwealth Bank has increased household deposits by a whopping $22 billion, or 27 per cent, to $104 billion in the two years to June.