SEOUL, KOREA - As the low interest rate regime continues, savings banks no longer offers higher rates for deposits than those offered by commercial banks. That's because savings banks have stopped sales promotions to attract savers as they faced difficulty finding profitable investment venues for their funds.

Only a year ago, savings banks had offered interest rates ranging from high 4's to low 5 percent while commercial banks were offering interest rates of low 4 percent. But now most savings banks offer low 3-percent deposit rates.

 

According to the Bank of Korea, the 2008 interest rate for the one-year time deposit sold by savings banks was 6.91 percent, 1.04 percentage points higher than that offered by commercial banks (5.87%). The spread widened to 1.77 percentage points in 2009. As of the end of 2012, however, the difference has narrowed to as low as 0.4 percentage point.