Abbey bids to cash in on rivals' credit crisis woes
Abbey, the high-street bank owned by the Spanish group Santander, will today launch the latest stage of an aggressive drive to win market share from its struggling banking competitors, as it launches one of the first credit cards to offer cash withdrawals for free.
The new Zero credit card will also be the first new launch for over a year to offer 0 per cent interest on balance transfers without charging a fee to customers who switch to it.
While this sort of balance transfer deal was widely available two years ago, in more recent times every major credit card provider has introduced fees of between 2 and 3 per cent for those who switch debts.
Abbey has been making an aggressive push into all corners of the financial services market in recent months. It is believed to have been among the top three writers of new mortgage business over the past six months, and has also launched competitive new products into the current account, savings and investment markets.
Earlier this week, the bank launched a new one-year fixed rate savings account, paying interest of 9.1 per cent for all customers who make a deposit of the same size or greater into one of Abbey's investment products.
Anthony Frost, a spokesman for Abbey, said that the bank had been able to continue to be aggressive throughout the credit crunch due to the strength of its parent, Santander. It has also benefited from a decision to reduce the risk in its mortgage book towards the end of 2006 and start of 2007.
"When the credit crunch hit, we had no sub-prime exposure," he said. "Furthermore, over the last three years, Santander has been increasing the efficiency of Abbey, reducing the cost income ratio from 70 per cent to less than 50 per cent."
Julia Harris of Moneyfacts, the price comparison service, said Abbey's aggressive approach had been noticeable across all areas of the market over the past year, especially in the mortgagesector. "It's certainly made some decisions that have gone against the regular trends," she said."But there's often a catch. This week, for example, Abbey reduced its tracker rates, but it also reduced the maximum loan to value from 90 to 75 per cent, which meant the loans were available to fewer people."
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