A recent report by Allica Bank has shed light on a concerning trend in the banking sector: British high-street banks are withholding over £200 million in savings interest from SMEs, according to an independent tracker published today.
The report highlights how major banks have been offering poor interest rates to SMEs, which remain stagnant for months, resulting in significantly lower returns on their savings compared to what they deserve.
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On average, SMEs in the UK hold around £75,000 in business savings, but they receive less than 1.6% interest on this balance from big banks. In contrast, challenger banks offer rates as high as 4.33%, translating to £172 per month in additional savings for individual SMEs.
The gap between the savings rates offered by big banks and challengers means that last month alone, big banks withheld approximately £208 million of savings interest from British SMEs. This figure doesn’t even include the substantial amount of money businesses keep in current accounts, earning no interest at all.
Allica Bank’s new SME Monthly Savings Tracker monitors the average savings rates offered by major banks compared to those offered by challenger banks for similar SME savings products. The data reveals a significant gap in rates between the two categories of banks.
Richard Davies, CEO of Allica Bank, expressed concern over the situation, stating, “SMEs across the country are getting ripped off when it comes to their business savings.” He emphasized that despite the Bank of England Base Rate remaining steady for almost a year, big banks have failed to pass on better savings rates to their SME customers.
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By GlobalDataThe report’s findings align with Allica Bank’s previous research, which estimated that SMEs are owed more than £7.5 billion in ‘missing’ savings interest per year. Despite this, big banks continue to offer lower interest rates to smaller firms, with many receiving no interest at all on their savings.
