From Wednesday, Coop Bank has raised the annual interest rate on term deposits for both private and corporate customers to 4.5 percent. This is currently the highest interest rate among all banks operating in Estonia.
Coop Bank is now offering a 4.5 percent interest on 12-17 month deposits. Until now, Coop's interest rate on annual deposits had been 4.25 percent, similar to several of Estonia's other commercial banks.
According to Paavo Truu, CFO of Coop Bank, deposit rates are currently at their highest levels in the last ten years.
"According to Bank of Estonia (Eesti Pank), for example, in August this year households and companies had term deposits worth €5.3 billion, which is 167 percent more than a year ago. It is difficult to predict the future movement of interest rates, as it depends on international financial markets. However, the prevailing view is that interest rates are peaking or have peaked and so opening a deposit account today is a justified decision," Truu said.
As the Guarantee Fund (Tagatsifond) guarantees deposits invested by both private and corporate customers in Estonian credit institutions, with interest earned, up to a value of €100,000, interest earned on deposit accounts can be a low-risk way to generate funds.
Interest rates on deposits have risen as a result of successive increases to the European Central Bank's (ECB) key interest rates. However, prior to the monetary policy reversal, interest rates had for a long period been at zero or even negative.
Editor: Michael Cole