Hang Seng Bank plays for time on deposits

IN the competitive world of deposit-grabbing, it is not the deposit amount but the maturity that matters.

Commanding a 14 per cent share of deposits in Hong Kong, Hang Seng Bank yesterday introduced an innovative product to lure customers into opting for a longer-dated time deposit.

With most of the deposit fixed for only one month, the bank is prepared to give customers some flexibility to bargain for a longer-dated deposit of three to 12 months.

Called an EasyDraw Hong Kong dollar time deposit, the product allows depositors to make an early withdrawal of part of the principal any time after the first 30 days.

After part withdrawal, the remaining balance of the time deposit will continue to earn the same interest rate set at the time the account was opened, provided the balance does not fall below $50,000. The minimum amount of each withdrawal is $20,000.

Instead of charging the customer on the total amount of the time deposit, as most banks do, the penalty will only be levied on the amount withdrawn, leaving the rest of the time deposit intact.

The penalty rate is the usual best lending rate plus one per cent or the deposit's contract rate plus two per cent, whichever is higher.