Savings rates with the big banks are dire, and have been for more than a decade now.
But Money Mail figures today reveal that you would still have done better sticking with stingy savings rates than buying shares in High Street banks.
The stock market almost always beats the interest paid out on cash savings rate in the long run.
Banks slump: Our figures today reveal that you would still have done better sticking with stingy savings rates than buying shares in High Street banks
Yet figures prepared by investment service Hargreaves Lansdown and data analysts Moneyfacts show this has been far from the case with the big banks — even when dividend payments are added on top.
A £10,000 investment made with Britain’s banks in January 2011 would now be worth just £6,254.24. Whereas the same amount put in the average easy-access savings account would have now grown to £10,577.55.
Savings beat investing with every bank on the British High Street, the figures show.
If you bought £10,000 stocks in Spanish bank Santander a decade ago, you would now have just £6,383.23. Whereas if you left the cash in savings with the bank, it would now be worth £10,815.61.
The same amount invested in NatWest would now be worth £4,873.40, and with Barclays £7,652.97.
Had you bought £10,000 of shares in the Banco Sabadell Group, which bought TSB in 2015, your investment would have been obliterated to just £2,245.71.
The best performing bank when it came to savings rates was the Bank of Scotland, which would have paid £858.67 interest on your £10,000 deposit. The worst was HSBC, which would have paid out just £216.05.
The figures do not take into account inflation, which would have cut the value of £10,000 by close to £300 over these ten years.
Nicholas Hyett, equity research lead at Hargreaves Lansdown, says banks have struggled to make a profit from short-term lending due to squeezed interest rates.
He says: ‘UK banks have generally performed far worse than the stock market average over the last decade. There are several factors, but by far the most important is the effect of stubbornly low interest rates.’
And he adds: ‘Their fortunes haven’t been helped over the past decade by the PPI [payment protection insurance] scandal — which cost the industry tens of billions.’
But Mr Hyett says investors should not necessarily abandon banks altogether, adding: ‘Just as banks have suffered from falling interest rates, you would expect them to benefit if interest rates started to rise.
‘It’s important investors maintain a diversified portfolio, not putting all their money into recent winners and pulling out of recent losers, since one day the wheel will turn and you risk losing out on significant upside when that happens.’
It comes as figures last week revealed low cash Isa rates over the past ten years have meant savers have lost out to inflation, with £10,000 on average shrinking to £9,772.
