epa03032327 A man walks past a branch of CIMB Bank in downtown Singapore, 13 December 2011. Risks to global financial stability have increased significantly in the second half of this year and a protracted global slowdown could weigh on Singapore’s economy the island nation’s central bank (MAS) said in its 12 December 2011 report. ‘Contagion (in Singapore) from the sovereign debt crisis has to-date been largely limited to the equity market. Financial institutions continue to be well-capitalized. Local banks’ earnings remain robust and asset quality has improved steadily’, the MAS said. EPA/STEPHEN MORRISON

CIMB Bank in Singapore was forced to backtrack after a group of angry customers set up a website to protest against the bank’s plan to raise the mortgage floor rates.

The bank said it had abandoned an earlier decision to increase the floor rate from 0.1% to 0.9%, as the CEO tried to appease outraged customers.

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“We thank our customers for their feedback, and we sincerely apologise for the inconvenience caused,” chief executive officer Victor Lee said in a statement.

The bank said it would maintain the floor rate at 0.1% for certain mortgages tied to the Singapore inter-bank offered rate (Sibor) and swap offer rate (SOR).

“We factored in that the market’s cost of deposits has fallen, hence allowing us to lower our deposit rates and cost of deposits so that we can maintain our floor rate at 0.1%,” Lee said.

“A fundamentally wrong” decision

More than one hundred CIMB customers had come together through social media to create a website in order to vent their anger at a decision that one of them said was “just fundamentally wrong”.

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“Nobody would expect — in the middle of a pandemic as interest rates began to fall — CIMB would suddenly inform all their customers that the floor rate would now be 0.9 per cent rather than 0.1 per cent,” the group wrote on the website.

Group members said they had tried earlier to find out the reason behind the “unreasonable” decision, to no avail.

“Giving peace of mind” to customers

CIMB said it would offer its customers either a two-year fixed rate of 0.9% or a three-year fixed rate of 1.10%. This would be to “mitigate the fluctuations of the current volatile interest rates environment”.

“This will give our customers peace of mind for the next three years, allowing them to plan their finances accordingly for the immediate three years,” said Lee.

“We are offering the lowest fixed rates for our existing customers on the SIBOR and SOR packages as of today.”