GE boss has UK's banks in his sights

[Sunday Telegraph Business page B3 - 25.3.12.]

GE, the US power and industrial conglomerate, is to open its first British bank in the biggest launch into the UK banking sector since the financial crisis. The new internet bank - to be called GE Capital Direct - will aim to attract billions of pounds of savings in its first year of trading. It wants to increase the size of its £10 billion-plus UK corporate loan book. The launch amounts to a declaration of intent on high street incumbents such as Lloyds Banking Group and Santander plus relative newcomers including Virgin Money and Metro Bank, with GE expected to offer keener interest rates to long-term savers due to the strength and size of its balance sheet.

Lenders increase SVRs

Clydesdale and Yorkshire Banks have announced an increase to their standard variable rates (SVR) for residential mortgage customers. The increase is to come into effect from 1 May 2012, and will see the banks' SVRs rise from 4.59% to 4.95%. The banks cited the increased costs associated with wholesale borrowing as the reason for the increase, while pointing out that it was the first change to the SVRs in three years. A customer with a £100,000 mortgage will see their monthly bill increase by around £30 per month. "This change will help enable us to continue to support savers and maintain the competitiveness of our deposit rates," commented Steve Reid, retail director.

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ISAs overtake pensions

For the first time since 2001/2, Britons saved more into stocks and shares ISAs than personal pensions last tax year, AJ Bell has said. Figures from the Office for National Statistics released today showed that £14.28 billion was saved into personal pensions (excluding stakeholder) in the 2010/11 tax year compared to £15.8 billion saved into stocks and shares ISAs in the same tax year. This compares with £12.5 billion being subscribed to stocks and shares ISAs and £14.4 billion contributed to personal pensions in 2009/10. AJ Bell's Billy Mackay said it was a 'ticking timebomb for the UK'. "The Government needs to do everything possible to make pensions attractive and simple," he added.

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