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Widows Bank spurns deposit account war

Scottish Widows Bank will not be drawn into a rate war with rival HSBC which is offering an 8 per cent deal and online banks, says managing director Graeme Hartop.

Widows Bank has posted its 10th straight year of profitability and Hartop believes loss-leading account propositions will undermine what the firm has achieved in the past decade.

The bank posted profit growth of 49 per cent, up from 16.5m in 2003 to 24.6m in 2004. Mortgage lending rose by 32 per cent to 3.46bn while deposits remained steady at 2.2bn.

Hartop believes Widows Bank can continue to grow faster than its rivals in the mortgage market, particularly as it is from a low base. Its share of the mortgage market grew by 13 per cent in 2004.

He concedes that competing in the deposit market is tougher because of the financial muscle of the likes of HSBC and its ability to absorb loss-leading strategies.

Hartop says: “Because of our size we should be able to consistent growth above the market average in mortgages, but the deposit market is tougher because some providers are paying loss-leading rates.”

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