ASB made the latest play earlier this week when it boosted its five-month terms 110 basis points to 4.60%, just days after ANZ National Bank dropped its rate in this term 100 points to 3.50%.
However ANZ and National opted to take over the six-month space, where they boosted rates 110 points to 4.60%. The banks appear to agree that the top rate for terms under 12 months should be 4.60%.
ANZ joins stablemate National Bank in seeking six-month term deposits, while the five-month space is being fought over by ASB, Bank of New Zealand and Westpac.
KiwiBank is sitting on its own in the four-month space.
Ian Park, chief executive of retail banking at ASB, said the banks traditionally focus on deposits under 12 months as investors require access to their funds, and can get better returns for longer term investments elsewhere.
"Retail depositors need to keep their funds reasonably liquid" and terms for less than a year offer them that, he said. Any cooling down of the competition is "some way off as excessive competition in the deposit space drives pricing."
Park doesn't see the deposit war abating any time soon as the banks prepare for the Reserve Bank's prudential regime, requiring them to maintain strong cash positions to lift the country's financial stability.
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