Savings Accounts Lose Steam

Due to falling interest rates, investors hungry for bigger returns are moving their money from savings deposits to trust accounts, an official at the nation's central bank said.

Total investments in the trust accounts of ten commercial banks, including Kookmin Bank, H&CB and Hanvit Bank, increased by 2.8 trillion won ($2.2 billion) to 61.4 trillion won in February.

More money went into savings accounts last month as well, but the increase fell far short of the big jumps the industry had seen recently. At the end of February, 304 trillion won was in savings accounts, 356 billion won more than the month before, but the rise is negligible next to the monthly increases of 7-10 trillion won that banks were receiving in the second half of last year.

"Because deposit interest rates have fallen to the 6-percent level," an official at the Bank of Korea said, "many investors are starting to move their cash into time deposits, trust accounts and money market funds that still promise returns in the 8 percent to 10 percent range."