One New York City bank is putting a new face on a tried and true product in hopes of luring depositors back into its branches.
Bank Leumi Trust Co. of New York, the U.S. subsidiary of Israel's Bank Leumi, has begun offering a two-year deposit product to complement its existing line of certificates of deposit.
The time deposit is aimed at consumers who are worried about interest rate fluctuations and asset liquidity, said Richard Kane, president of Bank Leumi.
"We tried to put together a product that would ease customer concerns about liquidity," Mr. Kane said. "But it's hard to separate liquidity and interest rates."
Differences Noted
Unlike traditional CDs, in which depositors lock in a rate and face penalties for early withdrawal, Bank Leumi's Triple Choice Time Deposit lets the customer increase the CD's initial interest rate once during the two-year term and allows them to make additional deposits up to 100% of the initial deposit.
The CD also has a provision that allows a person to withdraw up to 50% of the current balance, without penalty, once during the two-year term.
While not uncommon, this type of CD does show the lengths that some banks are taking to attract and retain deposits.
Similar Products Elsewhere
Bob Heady, publisher of Bank Rate Monitor, said such CDs have cropped up all over the country as a way to woo deposits with terms of several years.
Mr. Heady calls this CD a "bump and run," because the customer has the chance to bump the interest rate up once and run with it.
Leumi's CD products have met with mixed success so far. The Triple Choice CD is the third deposit product the bank has unveiled after having limited success with its Rate Booster and Prime Rate CDs.
How They Work
The three-year Rate Booster allowed customers to lock into a higher interest rate once during the term, while the Prime Rate CD floated at a set spread below the prime rate.
Mr. Kane of Leumi hopes the new CD will attract more attention than the other products did.
"We see a little bit of movement but the revolution has yet to arrive," he said.
Bank Leumi Trust Co. is a full-service commercial bank with assets of $2.1 billion. It is the largest subsidiary of Bank Leumi, which is based in Tel Aviv.
