Big 6 Banks Withheld Over £200Million in Savings Interest From SMEs Last Month; Allica Bank Reveals

Recent macroeconomic conditions have been difficult for SMEs across the UK, while access to finance also appears to have decreased, making it difficult for many to survive. New research from Allica Bank, the bank for businesses, has now revealed that British high-street banks withheld more than £200million in savings interest last month from SMEs.

By offering poor interest rates, which remain unchanged for months, Allica Bank argues that the big six banks paid, and continue to pay, SMEs far less than they deserve on their hard-earned savings.

The average SME in the UK has around £75,000 of business savings and is offered less than 1.6 per cent interest on average on this balance by the big banks.

Meanwhile, the best challenger bank rate has held steady at 4.33 per cent – a nearly three per cent difference, – the equivalent of around £172 a month in additional savings for individual SMEs.

Looking at the whole SME market, the gap in savings rates offered by big banks and challengers means that last month alone big banks withheld around £208million of savings interest from British SMEs. This figure does not take into account the money businesses are keeping in current accounts not earning any interest at all.

Richard Davies, CEO of Allica Bank

Richard Davies, CEO of Allica Bank, said: “SMEs across the country are getting ripped off when it comes to their business savings. By tracking the rates that major banks offer to their small business customers it shows that nothing is changing.

“The Bank of England Base Rate has consistently sat at over five per cent for almost a year now, which means there is no excuse for banks not to be passing on better savings rates to their SME customers.

“Seeing the continued stagnation of the rates offered to SMEs just confirms to me that they don’t value their small business customers. It’s an incredibly tricky time to be a business owner in the UK and every penny counts.”

Calling for change

Allica’s new SME Monthly Savings Tracker monitors the average savings rates offered by big banks compared to the savings interest rates offered by challenger banks for comparable SME savings products.

It highlights a continued and significant gap between the rates SMEs are offered by challenger banks and their larger, incumbent competition.

This data underpins the bank’s previous research, which found that SMEs are due more than £7.5billion in ‘missing’ savings interest per year, with big banks offering much lower interest rates to smaller firms compared to large companies, and in many cases offering smaller firms no interest at all on their savings.

This growing discrepancy in the rates offered is occurring despite the Bank of England’s base rate remaining steady at 5.25 per cent for 10 months.

The research tracks the top rates offered every month by the challenger banks and contrasts them against rates offered by the six largest incumbent providers in the UK – Barclays, HSBC, Lloyds, Nationwide, NatWest and Santander.

Following the latest monthly savings tracker, Allica Bank is continuing its call to the wider banking industry, urging banks and financial institutions to give small businesses a better deal on their savings, enabling this money to be pumped back into local economies.

Allica recently wrote to the Treasury Select Committee (TSC) asking MPs to investigate the lack of transparency in the business savings market and has since launched a campaign, The Great British Savings Squeeze, to tackle the issue.

The post Big 6 Banks Withheld Over £200Million in Savings Interest From SMEs Last Month; Allica Bank Reveals appeared first on The Fintech Times.

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