Banks bid for UK savers on auction site

Banks bid for UK savers on auction site

A new Web site where banks and building societies competitively bid against each other for savings customers through online auctions has been launched in the UK. lets registered users - individuals, companies or organisations - auction their savings, choosing how much they want to deposit and for how long. In turn banks and building societies bid against each other, offering time deposits at their best available interest rates.

The site is based on Danish outfit, which was founded in 2002 and now processes over £200 million a month. The firm is now looking to expand into the UK and take advantage of Brits seeking out competitive rates during the economic crisis.

The Web site is aimed at people, companies or organisations looking for the highest possible interest rates on deposits of over £12,000 for a fixed term of between 14 and 730 days.

The service costs depositors £6 to register for a single transaction or £35 for an annual subscription. Deposit takers pay a fee only if a transaction is agreed upon, which is calculated on a sliding scale.

The firm says participants can expect competing bids from FSA-regulated banks and building societies within two hours of registering online and offers are valid, with no obligation for the depositor, for 24 hours.

John Norden, MD,, says: "We've proven through our operations in Europe that the interest rates banks are prepared to offer via auction are materially higher than the rates offered both on the high street and on ordinary online savings sites so it makes sense for savers."

Andy Golding, CEO of Saffron Building Society, adds: "The current economic conditions mean that the environment for banks and building societies to raise funding is extremely competitive, whether from one another or through the capital markets. It therefore makes sense for us all to take advantage of alternative sources, in this case it is direct access to savers' funds via"

Following the UK launch, plans to continue its roll out to Sweden, Luxembourg, Belgium, The Netherlands and Germany within the next year.

In the US a similar site, called MoneyAisle, launched last year and a Dutch offering, Spaarbod, went live earlier this year.

Comments: (1)

A Finextra member
A Finextra member 24 July, 2009, 17:35Be the first to give this comment the thumbs up 0 likes

It is well known that banks and building societies are struggling to secure funding through the wholesale markets and therefore are seeking more stable and widely spread finance in the form of retail deposits. While this new site allows these institutions to gain access to savers' money via online bidding, banks are still initially restricted in offering better rates due to the current lack of liquidity. Encouragingly, the growing usage of the online banking channel means that it is now financially viable for banks to set up their own low cost internet savings banks. The direct savings banking model, in particular, allows customers to be self-directed. This means banks can minimise overheads and pass on considerable incentives such as more competitive rates over the longer term to gain increased and direct access to deposits rather than temporarily through an auction site.