Bank of Scotland Ireland has introduced a new interest-bearing current account for medium-sized businesses and a low rate of interest on overdrafts on accounts accessed through the internet.
The bank, which is part of the Halifax Bank of Scotland group, is offering to pay an interest rate of up to 2.25 per cent where a customer holds funds of more than €50,000 in their current account. Customers can write cheques and will not be charged any transaction fees on the first 50 cheques written each month.
Bank of Scotland will also charge a rate of interest of 6.85 per cent on overdrafts or total loans of at least €250,000 that are operated electronically. This rate of interest is considerably below that charged by AIB, Bank of Ireland, National Irish Bank and Ulster Bank, which range from 8.4 per cent to 9.15 per cent.
Unlike the traditional current accounts offered by the Republic's four biggest banks, Bank of Scotland customers cannot make cash withdrawals or have standing orders or direct debits coming out of that account.
Announcing the details yesterday, chief executive Mr Mark Duffy said he expected customers would avail of its new services while maintaining current accounts with high levels of transactions at the main banks. "We are cherry-picking. People will join up for no other reason than to keep their bank honest," he said.
The bank's existing customers can adopt the current account from April 28th and it will be offered to the wider public from mid-May.
The current account will be operated in association with BNP Paribas, which will act as a clearing agent for the bank in processing cheques and transactions for its customers.
The business current account is geared towards businesses that have a high cash turnover, while the electronic overdraft is aimed at those requiring finance.
Mr Duffy suggests that, with these products, the bank will be able to increase its share of the small and medium-sized business sector from about 18.5 per cent to 20 per cent by the end of the year.
Last August, AIB introduced a new current account for its business customers who transacted their banking online offering to pay interest and reduce the rate of interest on overdrafts. Last month it abolished free banking for personal customers and offered to pay interest on some current account balances.
A couple of months ago, Bank of Ireland introduced a new online current account for business customers offering a rate of interest of around 1 per cent.
The banks are expected to come under pressure to pay interest on personal current accounts on foot of a study by the Competition Authority.
