SEB to start paying interest on current accounts from December

SEB building in Tallinn.
SEB building in Tallinn. Source: Ken Mürk/ERR

One of Estonia's main lenders, SEB Pank, is to pay interest on current accounts held by private customers, starting in December.

The rate will be 0.4 percent on accounts up to €5,000 in value.

Interest on sums in excess of this amount will be 0.01 percent with SEB from December.

Ainar Leppänen, SEB's head of retail banking, says that while the Euribor value has been either zero or in the negative for nearly seven years now, money has a price once more, as more interest is being paid on deposits. Nonetheless, many bank customers have not been depositing their money, he said.

"For this reason we are imposing an annual interest of 0.4 percent on the balance of savings in private customers' current accounts up to €5,000 in value, and we will charge an interest of 0.01 percent on the amount exceeding this amount.

"In this way, in the future, customers will also be able to earn income from the money they use in everyday transactions, and which is held in their current accounts," Leppänen went on.

Interest rates on deposits have been rising strongly through this year. Meanwhile the share of private deposits has risen by nearly 80 percent since the start of the year; private client current accounts already account for nearly a quarter of private savings as a whole

All deposits worth up to €100,000 per depositor, with the one credit institution, are guaranteed by a national guarantee fund (Riikliku tagatisfond).

The Bank of Estonia (Eesti Pank) meanwhile has noted (link in Estonian) that banks' interest costs are low, as most of the deposits from both individuals and firms are currently in current accounts, paying almost no interest.

Interest is calculated daily, at the end of each day, based on funds held in a current account, and is disbursed on a monthly basis, SEB says. 

Obtaining a higher interest rate is not package-dependent either.

The calculation of the 0.4 percent interest rate will begin automatically for current accounts held in euros, SEB adds.

At SEB, the interest rate for time deposits currently stands at up to 4.25 percent per annum, while the interest rate on savings deposits stands at 1.8 percent per annum, SEB said.

Of other private client banks in Estonia, Coop has been paying interest on funds held in its current accounts; Swedbank, the largest of the banks, does not plan to do so in the near future.


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Editor: Andrew Whyte, Barbara Oja

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