As cash in circulation rushes into the stock market, banks are racing to roll out special high-interest products. Because many deposits and installment savings mature around the year-end and New Year, they must work from now to diligently stem outflows to avoid a "money move."
According to the financial sector on the 6th, Shinhan Bank is selling the "Arcade installment savings" through the 9th, offering a maximum annual rate of 20%. It allows saving up to 100,000 won per week for eight weeks, and features a differential preferential rate based on game performance. IBK Industrial Bank of Korea also launched the "IBK Random Game installment savings" last month, which applies rates differently based on game results. The subscription period is 100 days, with a maximum annual rate of 15%. A bank official said, "Through quirky events such as random games, we encourage participation from younger customers, and we can also attract funds with high rates, making it kill two birds with one stone."
In addition, Jeonbuk Bank's 12-month "JB Super Seed installment savings" offers a top rate of 13%, and Hana Bank's "From today, Hana installment savings" offers up to 7.7%. Woori Bank's "Woori WON Mobile installment savings" also has a maximum annual rate of 7%. Banks have also raised "parking account (high-rate, on-demand savings deposits)" rates to the 3–4% range annually. IBK Industrial Bank of Korea on the 3rd launched the parking account "IBK Dependable Account" with an annual rate of 3.1%, and KB Kookmin Bank's "Monimo KB Daily Interest Account" features a maximum annual rate of 4%.
Banks are launching high-interest deposit and installment savings products to prevent capital outflows. As of the end of last month, the balance of demand deposits at the five major commercial banks—KB Kookmin, Shinhan, Woori, Hana, and NH Nonghyup—was 647.8564 trillion won, down 21.8674 trillion won in a month from the end of September (669.7238 trillion won). Typically, when deposit and installment savings products mature, the funds are placed in demand deposits, which banks often prefer because they can raise funds at lower rates.
Meanwhile, the balance of investment deposits is growing. According to the Korea Financial Investment Association, investment deposits—money that investors leave in their securities firm accounts to buy stocks or proceeds from stock sales not yet withdrawn—stood at 85.4569 trillion won as of the 31st of last month. It is the first time since statistics began in June 1998 that investment deposits have exceeded 80 trillion won. It is believed that a significant portion of funds leaving banks has flowed into the stock market.
A commercial bank official said, "With a rate-cutting phase and the bull market effect, outflows are accelerating, which is a major concern," adding, "To secure low-cost deposits such as demand deposits, we plan to roll out various special offerings through early next year."