Virgin Money told MPs that in addition to the base rate, it considers its comparative market position when setting its savings rates.
This it said, was to ensure it does not price products that risk either excess volumes that result in poor customer service outcomes, or move the bank outside of its targeted liquidity levels.
TSB explained its rationale behind its savings rate related decisions by stating that its business model is, put simply, "based on taking in deposits and then lending out that money" through mortgages and unsecured lending products such as personal loans.
Robin Bulloch, chief executive of TSB, wrote: “The margin made on the difference between rates offered to savers and those charged to borrowers is used to run the operation, including compliance with regulation, and much of it is reinvested in our business to fund the maintenance and improvement of the services we provide to our customers."
jane.matthews@ft.com
