Term Deposit Reviews - RaboPlus NZ

Reviewer: Greg

low rates compared to other main banks. Certainly no longer #1 in my book. Hope they improve in the future.

Reviewer: Richard

Mike, Aaron IS correct. Please check the Fair Trading Act. You are indeed misleading the public with information that "it is known to be out of date".

Mike Heath: Thanks Richard, to be honest I can't see how someone could be mislead by the banner.  The banner doesn't say or imply that RaboPlus' term deposit rates are invariably the best in the market.  It just says that RaboPlus' term deposits are No. 1, and backs that up with the "click for proof" link to details of how, for the last 2 years, the RaboPlus 90-day term deposit has won the Sunday Star Times Cannex Banking Award to the Best 90-Day Term Deposit.

Reviewer: Aaron

The banner on top of the website is no longer true (false advertisement?) RaboPlus' Term Deposit rate is no longer #1, please either adjust the rate to "live up to the promises", or just remove that part of ad. As for the rest, I'd still say RaboPlus is the best, #1 indeed.

Mike Heath: Aaron – the quote is in relation to yet again winning Sunday Star Times Cannex Banking Award for the Best 90 Day Term Deposit earlier this year.  If you click on the tile you’ll see the full quote from Rob Stock (Money Editor – Sunday Star Times).  I trust that clears things up as I can assure we are not trying to mislead anyone.

Reviewer: Leah

Mike, I, like many other Rabo depositors, have concern that your TD rates now lag behind the competition. The justification given in your blog has some theoretical merit but, given the Govt guarantee and the added cost advantage that Rabo has by having less than $5billion in deposits, seems commercially naive. If your TD rate trend starts to reflect in your call rates then I suspect that a huge amount of deposits will be gone by lunchtime.

Mike Heath: Leah, thanks for the comment.  I can assure you that nothing has changed from our end in terms of our pricing strategy – we continue to offer, as we have since we opened our virtual doors, the best rates possible. 

The market is very much being led by the global “credit crisis” and the way it has impacted the major retail banks in NZ, prior to the announcement of the deposit guarantee, has been on their cost of funds.  How the deposit scheme will impact rates going forward, it’s too early to say – will banks absorb the additional levy or will they pass it on (lower interest rates for deposits or higher interest rates for mortgages) – time will tell. 

As you no doubt are already aware, the NZ deposit scheme does not currently guarantee wholesale deposits, and given that NZ retail banks raise almost 40-50% of their funds offshore, are they likely to get these funds if they are not guaranteed – I would doubt so, I would imagine those markets that enjoy guarantees for wholesale deposits will attract the money.  So how it will impact the cost of funds for banks is also unknown.

Reviewer: Harvie

Mike, an extra star for your empathetic and responsive answer. Thanks. If the explanation you gave in May still applies now, what's happened to the lower-overheads cost advantage you offered your clients before May? How has that been priced into your deposit rates now, when you attracted a lot of business and bouquets by marketing the advantage the lower overheads offered depositors well before May 08? Given that it can be argued all banks may soon be on a common ‘safety’ basis because of the govt. guarantee (which in terms of the security of deposits undermines the meaningfulness of the extra 'A' in your credit rating for the 2-year period during which the guarantee holds good), what point of difference can you now offer depositors to attract and retain their business instead of seeing them off to a rival who is offering a 15% better ROI? What effect, if any, has any change in the rural economy (your main lending business?) had on the levels at which you can offer deposit rates?

Mike Heath: Harvie I can assure you nothing has changed.  We haven’t purchased any bricks and mortar branches, and our overheads are the same.  Our pricing policy is, as it has been since our launch, to offer amongst the best deposit rates in NZ and that also hasn’t changed.  What has changed, however, is the world in which we are operating.  Not that we needed one, we do support the government’s move to offer a retail deposit guarantee as we support measures to better secure investors hard earned cash.  And as per the Sunday Star Times article from yesterday (19th Oct) it will be interesting to see what impact that will now have on deposit rates.

Reviewer: Harvie

Rabo, you're letting the side down. You've removed the dinky little charts comparing your t/d rates with those of other banks, and replaced them with a comparison between t/d's and PIE funds. That's ok, but why are you no longer willing to overtly compare your t/d rates with other banks? Example: for the commonly-sought 12 month rate, Rabo = 6.50%, HSBC = 7.30%, ASB = 7.50%. Rabo is a full 1% lower than ASB, which equates to ASB offering a rate that is more than 15% better than Rabo.

Mike Heath: Harvie, sorry for the confusion.  We haven’t removed the charts because if you look at the left-hand navigation you’ll see they are still there (here is the link to the specific page - http://www.raboplus.co.nz/term-deposits/term-deposit-compare/default.aspx).  What we did do was change our Term Deposit page to include the new Cash Advantage Fund comparison calculator, however we appreciate your feedback and will also restore the reference to the comparison charts on Term Deposit page.  With regards to our rates, versus those of our competitors please have a read of my blog post of May this year as I believe the same explanation still applies.  Thanks for the feedback.  
 

Reviewer: Aaron

Overall, I am happy with my term and call deposits with Raboplus. Since Raboplus's inception about two years ago, they have really given the NZ term deposit market a shake up and left all the major banks in their wake, forcing them to get their act together and offer half decent rates for a change only to be penalised for withdrawals or a minimum $5k 10k term deposit amount. I'm happy with the current rates and can understand why Raboplus isn't going to offer "the competitve rate on the day" unlike the australian owned banks who have exposure to the US and more recently Lehmann Brothers - for example CBA or ASB here has something like $150M aus exposure to them so of course their cost of funds is going to go up as they struggle to get funding resulting in slap happy term deposits rates here but also higher mortgage interest rates. Good on you Raboplus,keep up all the good work and thanks for the attractive "bank a rate" of 8.2% recently.

Reviewer: Arnie

Don't forget Rabo offers compounding on a 12 month term the others are a flat rate at end of term.

Reviewer: Deb

Hi Can I please ask why there are no PIE term deposits with Rabo?