Rabobank launches net banking service

RABOBANK has announced plans to take on the country's banks, but stopped short of a full price war by only offering savings and investment products.

The Dutch bank, the owners of ACC, yesterday launched its internet banking service RaboDirect in Ireland, offering deposit accounts and managed funds.

Rabobank said its deposit account is offering the highest variable interest rate in the country at 3%, about 10 times greater than what is being paid out on ordinary current accounts.

"The market has been crying out for competition. Customers are crying out for a better deal from their banks," said Rabobank general manager in Ireland Greg McAweeney. "We are offering savings products, a range of managed funds and there will be others products to come," he said, adding that it would eventually look at offering personal loans and mortgages.

However, it has no plans to offer ATM services, credit cards or current accounts and will not open high street branches.

The bank said its target was to have 10,000 customers signed up by the end of this year. The bank said it can offer customers better rates because as a co-operative, it was not focused on short-term profitability.

Though Rabobank is only getting a toehold in the Irish market, the new competitor could further erode the market share of the major banks.

The past six months has seen two new competitors in the shape of Danske Bank (through its purchase of National Irish and Northern Bank) and Bank of Scotland, which is planning a nationwide branch network.

The increased competition has already put the big banks on the back foot to meet the new players. Bank of Ireland is paring back its cost base to put more employees in its branches. Its cost-cutting programme envisages about 2,100 job loses.

Rabobank's acquisition of ACC Bank from the Government in 2001 gave it access to the consumer banking market for the first time, but it has also cast eyes over other institutions.

Rabobank International director Ralf Dekker said it had sought a tie-up with the EBS Building Society.

"We had extensive talks but it turned out to be too legally complex."

Rabobank is among the top 25 banks in the world.