In the middle of doing research for a larger piece on Northern Rock, I happened to come across its retail bank in Denmark with this fattened pig image in the land of bacon. "Retail bank in Denmark?" I hear you ask. Yes, it's just celebrated its one year anniversary. Moreover, it offers extremely competitive rates for savers over there, and proclaims on its website that:
"Your savings with Northern Rock continue to be safe and secure, protected by the UK Government guarantee arrangements"
Under the proclamation of "business as usual", it details its rates. You can get 5% interest if you deposit more than 5,000 Danish Kroner (about £505).
It's ten years since I left banking, but I reckon this is a very good interest rate for savers. The Danish central bank (through its discount rate) lends at 4%. Danish banks (the Copenhagen Interbank Offer Rate , like our LIBOR) lend to each other at 4.63%. I cannot find a rate for a Danish Government Treasury Bill, but I think it should be around 4.25%, based on the other rates I just quoted.
We know that the European Commission will be taking a look to see if Northern Rock is behaving in an anti-competitive manner. I reckon that offering Danish retail savers 5% when the local banks are lending to each other at 4.63% will raise some eyebrows. If you opened your account before 1st December, by the way, you will be getting 5.5%.
They also seem to have a rather competitive fees schedule.
You might well be asking why the British taxpayer is now subsidising favorable rates for savers in Denmark. A small point when we are faced with a now nationalised £110 billion business on our hands since 00.01 on Friday, but perhaps symptomatic of a business that never seems to have run itself on rational lines.
