AIB hike sees savings rates hit 10-year high as it doubles interest ...

AIB and its subsidiary EBS will pay 2pc on a number of deposit accounts from this week, the Irish Independent has learned.

This is up from 1pc, with experts pointing out that it is more than a decade since savings interest rates were at 2pc.

The move is likely to force Bank of Ireland and Permanent TSB to respond.

Banks in this country have come in for huge criticism up to now for just passing on a fraction of the seven European Central Bank rate increases to savers. There is some €151bn in household savings across the three retail banks and credit unions, which has been earning little or nothing for years now.

AIB, which is run by Colin Hunt, is set to announce it is increasing the savings rate to 2pc on both AIB and EBS regular saver offerings.

It is increasing the rate to 1.5pc on the AIB One-Year Fixed Term offering for personal and business customers.

AIB Junior, AIB Student Saver rates and EBS Family Savings rates are also increasing to 2pc. The EBS Children and Teen Savings rates are increasing to 1.50pc.

The EBS Family Saver account will see its rate double to 2pc in year one.

All the rate changes are happening with immediate effect.

The bank said its savings and deposit products can be opened via the AIB Mobile App, online, or in branch.

Managing director of AIB retail banking Jim O’Keeffe said the bank will continue to keep its deposit rates and product offering under review.

The failure, up to now, by banks to pass on all the ECB rate rises means savers have been short-changed, consumer advocates have claimed.

Banks have been using the €151bn in household savings to subsidise mortgage rates that allow the banks to compete with each other for mortgage business.

Central Bank Governor Gabriel Makhlouf called this out in April when he told TDs and senators that Irish banks are making around €1.8bn a year by putting household and business deposits in the European Central Bank (ECB), where the deposit rate is currently 3.25pc.

He said they were using money from savers to subsidise mortgage holders.

Bank of Ireland increased its interest rates for savers twice this year, with Permanent TSB raising savings rates three times lately. But they are now lower than those for AIB Group.

Interest paid on some new State Savings increased in March for first time in 16 years.

These An Post products are largely tax-free, but experts said the rates on offer are poor despite the recent increase.

Central Bank figures show that this country has some of the lowest savings interest rates when compared with the rest of the Eurozone.

Daragh Cassidy of price comparison site Bonkers.ie said AIB has come under huge pressure to hike its deposit rates.

He said Irish banks could still offer higher rates, pointing out that people who sign up for Europe-wide savings platform Trade Republic can get 2pc on amounts up to €50,000.