The EBA has classified in its consultation non-branch deposits as high risk. We believe that not all non-branch deposits are riskier than deposits received through branches. For example, internet deposits could be more resilient than branch deposits as the evidence from Northern Rock shows that withdrawals from branches were higher compounded by the sight of queues outside the branches. We believe the critical element in keeping retail confidence lies more towards service level or the ability to respond to customers which is not covered in the consultation.
The research paper titled ‘Reflections on Northern Rock’ published in the Journal of Economic Perspectives—Volume 23, Number 1—Winter 2009—Pages 101–119, clearly proves this point where 46% of branch deposits were withdrawn compared to 38% of internet depositors between June 2007 and December 2007.