In most cases, an interest rate of 4.25 percent now applies to both private and business customers.

Term deposits usually entail a sum of money being kept for a fixed maturity term, while the depositor is not permitted to withdraw this sum during that time, at least without incurring a penalty.

While the banks announced in June that the ongoing rise in deposit interest rates was slowing up, they have during this time hiked annual deposit interest rates, from 3.5-4 percent, to 4.25, following the ECB move.

The last round of bank interest rate rises in Estonia came at the end of last week.

LHV Pank

Annika Goroško, head of retail banking at Estonian bank LHV Pank, said the decision had been made further to increase deposit interest rates under the influence of the current interest environment.

She said: "The interest rate on a 12-month deposit account is now 4.25 percent, while the interest rates for other deposit periods have also risen: For a three-month deposit the rate now stands at three percent per annum, while the interest rate for a half-year deposit stands at 3.5 percent per year; for a nine-month deposit, it is 3.75 percent, while for a deposit opened for 24 months, the figure is 3.5 percent per year."

Term deposits of free-standing money have become highly popular, Goroško said - for example, the volume of private individuals' term deposits at LHV has tripled this year.

In addition to interest on time deposits, LHV Pank also raised the interest on demand deposits for business customers at the start of the summer, which means companies are being paid a significantly higher interest than usual, namely by one percentage point on amounts exceeding €20,000 on their current account.

Coop Pank

Paavo Truu, CFO at Coop Pank, said interest rates offered by the banks to depositors are not dependent on the ECB interest rate changes on a euro-for-euro basis, meaning these hikes will definitely have an effect indirectly.

Truu said: "Following our desire to continue to be the universal bank offering the best deposit interest rate available on the Estonian market, we have since July 31 increased the interest rates for time deposits paid out to our customers. The highest annual interest rate that we currently offer at Coop stands at 4.25 percent, valid from 12 to 17 to monthly term deposits."

"At the same time, we have also updated the interest rates on other term deposits. From Monday of this week, 3 percent annual interest income for a three-month deposit is viable, as is a 3.5 percent interest rate on a six-month deposit, and a 3.75 percent annual interest rate on a nine-month deposit. For a 18-24-month deposit, the new per annum interest rate stands at 3.6 percent," he added.

With its on-demand deposits, Coop says its Rändrahn package offers a 1-percent annual interest income to those who have joined, calculated on a daily basis and which the bank pays out to the customer's account each month.

Coop says it does not foresee any new rate changes on the horizon, Truu said. "In the long term, we can even foresee a drop in deposit interest rates, which is also reflected in our price list today, where interest rates on deposits set over 18 months are lower than annual interest rates."

SEB

Meanwhile since last Friday, SEB has been up to 4.25 percent interest on term deposits and 1.8 percent interest on savings deposits over the year.

Evelin Koplimäe, SEB private customer segment manager, said: "At the moment, customers are opting to enter into a fixed-term deposit for a year; nearly 60 percent of customers who placed their money in a fixed-term deposit have chosen this particular term. At the same time, we can see that the share of shorter-term fixed-term deposits has also grown rapidly recently.

Swedbank

Swedbank also raised its deposit interest rate to 4.25 percent last Friday. This is already its eighth interest rate hike this year.

Tarmo Ulla, Swedbank's head of private banking, said: "In total, the volumes of term deposits of private and business customers together have risen by 146.8 percent on year.

"Since the beginning of this year, the volumes of term deposits held by private and business customers have also risen, by a total of 97.5 percent. For instance, in June, new deposit contracts were signed for private and business customers, to the amount of €420 million," Ulla added.

"As nearly 80 percent of these new contracts were signed for an annual period, for this reason we want to to offer the best interest rates possible," he added.

The other major player in the consumer banking sector in Estonia, Luminor, says it is to publish its revised interest rates list on Thursday this week.

On July 27. ECB opted decided to raise the interest rate on its fixed deposits to 3.75 percent.

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