Šiaulių Bankas offers an alternative to low deposit interest rates

2016-12-14

Low deposit interest rate environment prevailing in the market is fostering to look for the alternative ways of saving. In light of this trend, Šiaulių Bankas has offered already the second time deposit with additional interest. This time the deposit is linked to such finical assets as agricultural raw material price indices.

"Fixed-term deposits are the most popular saving instrument among Lithuanians - they account for about one-third of the population's current deposits and their total value with the banks exceeds EUR 3.4 billion. However, the deposit attractiveness is declining since interest rates are especially low and assessing inflation may become even negative. On the other hand, Lithuanians remain conservative savers as for many residents of our country the voluntary pension accumulation funds, investment life insurance or securities still seem to be too risky investments ", - emphasised Deputy Chief Executive Officer of Šiaulių Bankas, Head of Business Development Division Daiva Šorienė.

According to D. Šorienė, such trends foster searching for non-traditional solutions combining profitability of customers' savings and protection of their funds at the same time.  This autumn Šiaulių Bankas has introduced the innovative deposit with additional interest. "Deposit with additional interest is intended for people who appreciate security of the traditional time deposit, but also tend to try participating in financial markets not exposing their savings to risks,“ - said D. Šorienė. In September, the bank successfully distributed the deposit linked to shares of the well-known oil sector companies - 1.6 thousand of deposit agreement had been concluded over one month.

Responding to the customers' increased interest in the product, Šiaulių Bankas is introducing already the second deposit with additional interest linked to agricultural raw material price indices. After deposit maturity, the depositors will receive fixed interest and, in case of particular circumstances, they will also receive additional interest.

Additional interest of this deposit is related to three indices – wheat price index S&P GSCI Wheat Index ER (SPGCWHP), corn price index S&P GSCI Corn Index ER (SPGCCNP), livestock price index S&P GSCI Livestock Index ER (SPGCLVP). "Prices of the fundamental grain cultures and livestock are at the very low level in the long run, but because of the limited Earth resources and population growth, demand for agricultural raw materials should potentially grow. Raw materials are the traditional way to hedge against inflation, therefore, rising inflation expectations will have a positive impact on agricultural raw material  prices", - said Viktorija Juzkiv-Grigaitė, Director of Investment Service Department of Šiaulių Bankas.

Depositors will be able to earn at least 9 per cent of interest over the entire deposit period - fixed interest from 1.5 per cent (annual interest rate of 0.5 per cent) as well as additional interest of 7.5 per cent (annual interest rate of 2.4 per cent.), if on the day specified in the deposit agreement the value of all three indices is increased by 7.5 per cent or more. Otherwise, depositors will receive the full amount of the placed deposits and fixed interest for the entire deposit period.

At the moment Šiaulių Bankas is offering to place 7 types of deposits. Šiaulių Bankas Group’s deposit portfolio grew by 3 per cent over nine months to nearly 1.48 billion euros at the end of September. Among banks operating in Lithuania, Šiaulių Bankas currently ranks fourth in the deposit market.