HBOS goes to war on current accounts

HBOS goes to war on current accounts

HBOS, the UK's fifth-largest bank, has set out plans to win retail market share from the big four commercial banks by cutting charges and boosting interest rates on current accounts, including the launch of a dedicated online account.

HBOS has set itself a target to increase its share of the UK current account market from 12% today to over 15% within three years. Since January 2001, 1.6 million customers have opened HBOS current accounts, with the group taking a 25% share of all new current accounts in the first half of 2002.

From January 2003, the bank says it will increase interest earned on Halifax and Bank of Scotland current account balances from 2% to 3%, while maintaining authorised overdraft fees of 8.9%.

HBOS says it will also launch a Web-only current account next year - the first of its kind from a UK high street bank.

The banks points to research from Forrester, which estimates 10 million online UK banking customers and projects 25% annual growth every year for the next four years. Analysts also estimate that the cost of an online transaction is approximately 1 per cent of the cost of an equivalent branch transaction.

In a statement, the banks says: "The Big Four do not appear to be passing on these savings to their Internet banking customers. HBOS will do so."

The bank also plans to launch a packaged account with no monthy fees. The packaged account market has traditionally been dominated by the Big Four banks. Latest figures show around 6 million people in the UK now have packaged accounts, with that figure expected to rise to 8 million by the end of 2003. Fees from these accounts currently earn banks around £500 million each year.

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