Michelle Monck

Michelle Monck

Consumer Finance Expert
Published: 15/10/2019

Raphaels Bank has informed savers that they will no longer be offering savings accounts and all existing funds will be returned to savers in the next 60 days.

This decision to close the 232-year-old bank’s retail savings division is a continuation of the bank reducing its activities.  Raphaels Bank stresses that it remains solvent and will comply with all regulatory requirements during this process.

Mike Redican, CEO Raphaels Bank said “All savings account holders have been given 60 days’ notice, in line with regulatory guidelines, of the bank’s intention to return their monies to them and close their accounts. All customers will receive their full interest entitlement up to the maturity of their investments. Every effort is being made to ensure that there will be no detriment to customers. Our customer support team, based in Aylesbury, will be available to answer any queries they might have.”

Raphaels Bank returned to the savings market in July 2013 and offered competitive fixed rate bonds, followed by notice accounts in 2014. Current savers affected by the closure of these accounts hold either five-year or three-year fixed rate bond or notice accounts of 60-days, six months and 12 months. Fixed rate bond savers whose term is not yet due to finish, will have their bonds closed early without penalty and receive the full interest for the term.

Where can Raphaels Bank savers find a new savings account?

Raphaels Bank had closed its savings accounts to new applications. However, those savers who remained on their savings back book were earning rates of between 1.00% and 1.70% for notice accounts and 1.90% and 2.95% for fixed rate bonds.

Raphael Bank’s notice accounts

Rate AER

12 Month Notice Account Issue 1

1.70%

6 Month Notice Account Issue 1

1.55%

12 Month Notice Account Issue 2

1.50%

6 Month Notice Account Issue 2

1.40%

6 Month Notice Account Issue 3

1.40%

60 Day Notice Account Issue 1

1.35%

60 Day Notice Account Issue 2 -

1.25%

60 Day Notice Account Issue 3 -

1.00%

Rate AER for 6 Month and 12 Month Notice Accounts is for balances from £5,000 and for 60 Day Notice Accounts from £2,000.

Raphael Banks fixed rate bond accounts

Term

Rate AER

Fixed Rate Bond

60 Month Bond

2.95%

Fixed Rate Bond

60 Month Bond

2.60%

Fixed Rate Bond

60 Month Bond

2.35%

Fixed Rate Bond

60 Month Bond

2.20%

36 Month Fixed Rate Bond

36 Month Bond

1.90%

Rate AER is for balances from £5,000.

 

While savings rates have been declining, those needing to move their funds from Raphaels Bank to a new notice account can find better rates with some accounts offering fewer days’ notice to access to their funds. For example, Gatehouse Bank 120 Day Notice Account offers an expected profit rate of 1.82% upon 120 days’ notice to access your funds. However, it can only be opened online, and the profit cannot be compounded. If you need faster access to your funds, then Close Brothers Savings 95 Day Notice Account pays 1.80% for 95 days’ notice, and in contrast to Gatehouse Bank can only be opened by post. Investec Bank plc has a 95-day notice account that pays the same interest rate as Close Brothers Savings that can be opened online and offers monthly interest.

Unfortunately, for those wanting to retain a fixed rate bond, rates may not be so competitive. Those earning the top two best rates of interest from Raphaels Bank will not find a deal to match these in the current fixed rate bond market.

 

The closest these savers can hope for is a five-year fixed rate bond from UBL UK with its 5 Year Fixed Term Deposit paying an interest rate of 2.36%. The account can only be opened by branch or post and interest is paid monthly, on anniversary or on maturity, but it cannot be compounded. Gatehouse Bank offers an expected profit rate of 2.35% on its five-year bond which can be opened online but profit is only paid on anniversary and is not compounded. The third option for savers in this category is BLME with an expected profit rate of 2.30%, where again profit is paid on anniversary and cannot be compounded.

Raphael bank savers holding the three-year fixed rate bond, can find a better interest rate and have a choice of 14 different providers. The top three rates for a fixed three-year bond are from Al Rayan Bank offering an expected profit rate of 2.42%, BLME with an expected profit rate of 2.25% and Gatehouse Bank at 2.25% expected profit rate. All can be opened online with BLME and Gatehouse Bank paying profit on anniversary and Al Rayan Bank quarterly – none of these accounts allow profit to be compounded.

 

In the current interest rate climate and with economic uncertainty savers may decide the prefer to keep their options more flexible and accept a lower rate of interest with an easy access savings account or a one- year fixed rate bond. Currently the best one-year fixed rate bond offers an expected profit rate of 2.22% from Al Rayan Bank, only 0.20% lower than its leading three-year fixed rate.

Disclaimer

Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

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