For the first time in a
decade, the amount of deposits held at “cyber” branches of banks in
the US is on the decline.
In the 12-month
period to 30 September, total deposits in the US dropped by 2.4% to
$132.4bn.
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The amount of online deposits
as apercentage of total deposits also fell, by 10 basis points from
1.8% last June to 1.7% in June this year.
Despite the need to cut rates
to maintain a margin – and in the middle of an increasingly
competitive market for deposits – ING bucked the trend and grew its
market share.
Online deposits at
Dutch-owned ING increased by 3.5% to $77.4bn in the year to 30
June.
As of 20 October, ING Direct
offered a rate of 0.25% for its Electric Orange account on balances
of less than $50,000, and 1.19% on accounts between $50,000 and
$100,000.
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By GlobalDataING Direct, the online
subsidiary of ING, represented 100% of its total US deposits and
accounts for more than 58% of all US online deposits. That is,
however, all set to change.
As a result of the harsher
than expected restructuring plan foisted on the bank by the
European Union, ING must sell the US arm of its ING Direct
operation by 2013. The unit has earned its Dutch parent accumulated
pre-tax profits of more than €1bn ($1.4bn) since it launched in the
country in 2000.
Online deposits at
second-placed E*Trade fell 10.6% year-on-year to $27.1bn. In a
conference call on 20 October, E*Trade said that deposits had begun
to bounce back in the three month period to 30 September, due to an
influx of deposits from brokerage customers.
The insurer MetLife grew
online deposits by more than a quarter year-on-year, to $4.4bn, to
rank fourth.
As highlighted by analysts SNL, the distinction between
online and other deposits can “get blurry”, as the Federal Deposit
Insurance Corporation’s “cyber” classification does not encompass
all internet banking operations. Huntington Bancshares reported the
highest four-year growth rate in online deposits. As of 30 June,
online deposits of $290.1m were up from $1.4m four years
ago.
