As the KOSPI surged well past the 5,000 level and the rally continued, major bank deposits fell by more than 30 trillion won in a month, triggering large-scale fund flows. Following commercial banks, regional banks are also rolling out deposits in the 3% range to stem outflows.
According to the financial sector on Feb. 4, regional banks such as BNK Busan and Kyongnam Banks, Jeonbuk Bank, and Kwangju Bank recently raised the top annual interest rate on 1-year-maturity deposits to above 3%.
As of the day, BNK Busan Bank's The Special Sale Time Deposits and Jeonbuk Bank's JB 123 Time Deposits carry a 3.10% rate. Kwangju Bank's Good Start Deposits offer 3.01%, and BNK Kyongnam Bank's The Dependable Deposits and The Partner Deposits offer 3.00%. Jeju Bank also recently raised the rate on its J Time Deposits to 2.98%.
A regional bank official said, "We are offering relatively higher rates to absorb part of the funds flowing from major commercial banks into the stock market."
As the stock market climbed sharply and funds flowed out, the five major banks (KB Kookmin, Shinhan, Hana, Woori, NH Nonghyup) raised interest rates on deposits to around 3% in early Dec. last year. But as the fund shifts continued, the five banks lowered deposit rates back into the 2% range in mid last month.
As of the 29th of last month, the balance of demand deposits at the five major banks stood at 643 trillion won and 263.4 billion won, down 30 trillion won and 745 billion won from 674 trillion won and 84 billion won at the end of last year. Investor margin deposits, the cash on the sidelines for the stock market, topped 110 trillion won to hit a record high.