Everything is simple here: the bank attracts the money of those who have free capital, paying a bonus in the form of interest, and distributes it in those areas that will bring him a profit, covering the costs of servicing the deposit. It could be said that banks thereby stimulate the development of the national economy, supporting loans and investment companies. But all are driven by one goal – to earn.
The interest rate on deposits to some extent depends on how much the bank wants to receive the money of the depositor. And his strategy plays a decisive role in this. For example, as practice shows, loan rates are higher for retail short-term unsecured loans (this explains them with a higher level of risk). Accordingly, a bank aimed at retail lending will offer higher deposit rates. And if the bank’s risk management system is built correctly, then the probability of deposit loss will be negligible.
Why does the bank need our money? For lending. But another situation is also possible: for patching holes in the balance. I will give an example from practice. In one country, at some point, a mortgage boom arose. It was more profitable to take property on credit in foreign currency because of lower interest rates in the equivalent, and loans, of course, were long-term. Therefore, it became a surprise for foreign currency borrowers when, due to the sending of the course to free float in the national currency, their loans increased by 3 times.
Massive defaults and challenging loan agreements have begun. Banks were forced to add to the exchange difference reserves from their own profits. Attempts to sell collateral, valued at the old rate, did not solve the problem. As the last straw, banks raised deposit rates, hoping at the expense of depositors to close the liquidity problem. True, the depositors themselves, in the wake of the panic, were quick to withdraw deposits. The result is logical: about 1/3 of the banks that could not bridge the balance gap ended their existence.
Something similar happened in the United States in 2008. Then banks needed the money of depositors and investors in order to finance new mortgages. Mortgages (a type of security) were issued under them, supposedly secured by loans, and were sold to investors. Conclusion: high deposit rates may indicate potential problems of the bank.
And one more interesting point: if you saw high rates on deposits at the bank, this does not always mean that the bank needs your money. It is possible that he needs you. Attracting customers, the bank also tries to impose other types of services on them: loans and credit cards, salary projects, underwriter services, issuing guarantees, selling precious metals, brokerage services, value storage services, etc.