Share trading and savings platform Trade Republic has launched a new savings product here which will see it applying the full 2% interest on deposits from the European Central Bank to its customer cash balances.
The European Central Bank has raised interest rates at each meeting since July bringing the main borrowing rate from zero to 2.5% and the deposit rate to 2%.
The ECB's deposit rate had been at -0.5% for a number of years which presented a dilemma to banks on whether they should charge customers for their deposits.
The main banks here had started levying a fee on very large individual and corporate deposits in excess of €1m before the recent shift in the interest rate environment.
While the banks have only partially applied the interest rate increases on to their fixed rate mortgage products (trackers automatically have the increases applied), they have been slow to pass the increase in the deposit rate onto customer accounts.
Trade Republic - which describes itself as Europe's biggest trading platform - has said it will offer customers the full 2% per annum on their cash balances.
The Berlin-based company launched in Ireland in October last offering customers access to capital markets to help fund their retirement.
"The interest is calculated in real time and paid out monthly, thus enabling customers to accrue compound interest," the company said in a statement.
"The offer is valid for all existing and new customers across markets for a cash balance of up to €50,000," it adds
Customer funds are protected up to €100,000 by the deposit guarantee schemes (DGS).
The company says it was attracted to the Irish market by the high level of savings in the wider economy.
We need your consent to load this rte-player contentWe use rte-player to manage extra content that can set cookies on your device and collect data about your activity. Please review their details and accept them to load the content.Manage Preferences
Household deposit levels increased sharply during the pandemic.
According to the Central Bank, the household savings rate reached 25% in 2020 compared with an average rate of around 10% in the prior three years.
While the savings rate moderated in 2021 and last year, it continued to remain high.
However, with the combination of high inflation and low rates of return on deposits, household savings are effectively being eroded over time.
"Exactly four years ago, we were among the first providers in Europe to introduce commission-free investing. Now, we are taking another step on our mission to make wealth accumulation possible for everyone," Christian Hecker, co-founder of Trade Republic, said.
The company charges a flat fee of €1 per transaction while savings plans are free of charge.
The platform offers customers here access to investing in more than 8,000 Irish, European, Asian and US stocks with more than 1,000 Exchange Traded Funds (ETFs) also available.
The savings plans allow users to automate investing in stock markets.
However, this new product is separate to the investment offering.
"There is no obligation to trade or invest," Hugo Suidgeest, Trade Republic Country Manager for Ireland and the Netherlands told Morning Ireland.
"You can put a lump sum on the new savings account and get the 2% and have nothing to do with investing if you don't want to," he explained.
As it is a product that appeals to a broader group than investing, he said he hoped it would attract new customers.
"The rate is eight times as high as the existing banks here so we hope new customers will find their way to Trade Republic," Mr Suidgeest said.
