In what was described by rivals as a "disastrous" result, b2, launched a year ago as a hip bank aimed at professionals in their thirties, confirmed it had attracted just pounds 200m in spite of a high-profile television advertising campaign costing Barclays over pounds 14m.
Barclays' then chief executive Martin Taylor launched the bank last May with a huge campaign spearheaded by the actor Richard E Grant. The pounds 14m marketing spend contrasts with less than pounds 2m spent by Legal & General to attract the same amount of money to the same type of product. It also compares poorly to Standard Life, which spent pounds 17m to attract over pounds 1.5bn in deposits - over seven times as much.
A spokeswoman for Barclays denied the sales were poor and said b2 had attracted 70,000 savers. "We are in long term savings and we are into getting people who are saving for the long term." But rivalssaid b2's campaign had flopped.
"pounds 14m is a horrible lot to spend attracting pounds 200m," said Michael Hayden, the director of savings and investments at Legal & General.
Savings experts said b2 had failed to attract more savers because it was too complicated. "The message was just a bit too sophisticated. And the competitors who have been successful have good customer databases - I don't know if that's the case with Barclays," said Roddy Kohn of financial advisers Kohn Cougar.
b2 was recently forced to pull the product trumpeted at its launch, called the Advanced Savings Account, after the cost of providing it mushroomed.
The product was marketed as "stock market investment without the risk". It used derivatives as a form of financial insurance against a stock market fall, promising, at a minimum, to return the saver's capital after three years. However, the derivatives became increasingly expensive last September, when stock market volatility doubled. Almost 15 per cent of each saver's investment was being used to buy the insurance, severely limiting the potential benefits.
Separately, egg, the Prudential's fast-growing telebank, cut the interest rate on its flagship savings account to 5.85 per cent gross. The cut followed last week's decision by the Bank of England to hold base rates at 5.25. In contrast to b2, the decision underlines egg's attempt to choke off demand for its savings account. After pledging to keep its rates at least 0.5 points higher than base rates, taking a loss on each account, egg has attracted pounds 5bn of loss-making funds.
Last week the bank closed to new telephone customers, but is still attracting thousands of online applications every day. The pledge ends on January 1. egg is privately accused by competitors of being a "rate tart" - attracting money by taking losses in an uncontrolled manner. egg's rates were held when the Bank of England last lowered base rates in April, and its gross rate is still 0.6 points higher than base.
Competitors said the cut demonstrated the difficulty of sustaining the losses.
Jim Spowart, managing director of Standard Life Bank, said: "It doesn't come as a surprise because the rates before weren't sustainable. While they're doing very well on the deposit side they have to look after the other side of the book: they haven't been that successful so far."Reuse content