You can get a market-leading return with an Agribank bond, but it is more of a gamble than a high street account.
Agribank is a little-known bank that’s offering exceptionally high interest rates for savings accounts. Be aware though that the security net in place is rather different to those from traditional high street banks.
How Agribank’s savings deals compare
Agribank currently offers two fixed rate bonds. There’s a three-year bond paying 2.7% AER and a five-year bond paying 3.3% AER. You’ll need to invest a minimum of £10,000.
Let’s see how they compare to the rest of the market, starting first with three-year bonds.
|
Account |
AER |
Minimum deposit |
|
NS&I 65+ Guaranteed Growth Bond |
4% |
£500 |
|
2.70% |
£10,000 |
|
|
Close Brothers Select Gold Fixed Term Deposit |
2.50% |
£10,000 |
|
Harrods Bank Fixed Rate Deposit |
2.50% |
£20,000 |
Top place is taken by the Government’s ‘Pensioner Bonds’ but if you’re under 65 you can’t beat Agribank’s offering.
Now let’s take a look at five-year bonds.
|
Account |
AER |
Minimum deposit |
|
3.30% |
£10,000 |
|
|
SecureTrust Fixed Rate Bond |
3.03% |
£1,000 |
|
3.02% |
£2,000 |
|
|
Yorkshire Bank Retail Term Deposits |
3% |
£2,000 |
|
Clydesdale Bank Retail Term Deposits |
3% |
£2,000 |
|
Close Brothers Select Gold Fixed Term Deposit |
3% |
£10,000 |
Over five years Agribank easily beats the opposition, with a far superior rate. In fact it even offers a better rate than the two seven-year bonds current on offer (3.11% from SecureTrust and 3.10% from FirstSave).
How safe is my money?
[SPOTLIGHT]At this point it’s important to note that Agribank is not regulated by the UK’s Financial Conduct Authority. Instead, it is headquartered in Malta and holds a European banking licence granted by the Malta Financial Services Authority.
Frank Sekula, the co-founder of Agribank, told us previously that this was because the UK regulator at the time, the FSA, wasn’t welcoming to new market entrants.
As a result, it means that any savings with Agribank aren’t protected by the Financial Services Compensation Scheme (FSCS). The FSCS ensures that the first £85,000 you have saved with any banking institution is protected, in case that bank collapses.
However, Agribank is covered by Malta’s version of the FSCS, the Malta Depositor Compensation Scheme, which covered deposits up to €100,000, which is about £77,000.
Where does my money go?
Agribank focuses all of its lending on UK agriculture. That means helping finance machinery and equipment through financial leases, hire purchase agreements and secured loans for terms of up to five years.
Agribank’s other co-owner Matthew Smart has been providing loans to farmers for well over a decade via a company called Eastern Counties Finance, so there is a lot of experience there.
Compare rates on savings accounts ISAs and peer-to-peer lending
More on savings and ISAs:
Where to earn most interest on your cash
'Pensioner Bonds' to remain on sale until May
'Millions' of ISA savers clueless about what returns they are getting