It’s good that some providers are holding back on the reductions. A drop in base rate doesn’t always mean the bank is going to experience a sudden drop themselves.
I’m sure Starling, Monzo and others are investing customer funds in supranational bonds and other securities to offset sudden base rate drops.
The main reason these base rate reductions are passed on immediately by most banks is simply because there is consumer tolerance for it. It’s expected by most people, so why not.
Does Monzo say exactly what they do with customer funds held in current and savings accounts? This would be quite interesting to know. Obviously they lend, but that’s subject to limits.
I’m sure it will be somewhere on the Monzo site. Sadly, I’m not interested enough in this topic to go and look for it. 
Smaller banks are actually allowed to do quite a lot with your money. I believe the rules only become super strict once you reach £25bn in deposits. This is why the likes of Marcus kept suspending deposits in the UK, to stop themselves being subject to the stricter rules.
Starling are transparent about this on their site:
“We invest your money on supranational bonds and securities backed by UK residential mortgages. These investments are to support the Bank’s liquidity. We carefully consider who we invest in, taking into account a number of factors. We do not invest directly in fossil fuels.”
Monzo stopped being the ‘better bank’ a LONG time ago tbf.
Where they can make a saving, they absolutely will.
The £25 billion is only really relevant where the bank has both a retail and an investment bank.
We’ve had this discussion before I think in another thread. You are correct, but reaching that threshold also limits what the retail operation can do with funds held, I’m sure.
Retail operations can and do invest, usually low-risk, easily convertible investments. You don’t need a separate investment bank to carry out these activities.
You are correct though, in terms of ring-fencing and separation of retail and investment banks.
I don’t know that they can invest as such, more put it in various cash related investments.
The ring fencing is to stop an investment arm of a bank pulling down the retail arm if things go badly wrong with the investment side. Think Lehman’s, which had at one point me as one of their retail clients.
They can and do. Bonds are still investments technically. They aren’t risk-free.
In terms of equities, definitely not. I think that is where we are diverging, on what we consider to be an investment. Ring fencing is for that purpose, but it has other requirements too which the retail parts must follow, even if they’ve not been separated from an investment arm.
I’m now going to read up more on this, to ensure I’m correct. I’m only 99% sure as you’ve made me doubt myself. Either way, I think we can both agree it’s a good thing that some providers are not passing on the base rate reductions?
Are you planning to stay up?
Starling only launched this saver very recently, this .25% drop was widely expected. This is very clever marketing when in reality they are telling you that you should have had 4.25% for the last few weeks.
I don’t care about the account interest that you post about every single day.
This is about the saver. There’s 10+ posts about it before you brought up the interest again.
I wasn’t replying to you, child.
You didn’t read or understand but jumped in as usual.
Ladies Ladies. Calm down.
It’s a bank account! Not a civil war between the two of you
It would be helpful if you used the function to reply directly to the comment you intended your response to relate to. I also thought you were replying to Jo.
This is unnecessary.
Why did you think I was replying to Jo when I didn’t use the reply feature?
There was no one comment I was intended to reply to further up, there was 10+ talking about until two about the interest for current accounts, and my post says saver in it and talks about a higher interest rate.
If there’s no profile icon by reply, it’s replying to the comment above it.
Exactly.
Which was Ben’s post, relating to Jo’s post…
You threw a dig at revels saying tag who you’re replying to - then acknowledge you know it was to Ben… not Jo…
Today is a ride on this forum.
Anyway…
Starling only launched this saver very recently, this .25% BOE drop was widely expected. This is very clever marketing when in reality they are telling you that you should have had 4.25% for the last few weeks.
In what world was it a dig? A suggestion at best.
His comment wouldn’t have made sense as a response to Ben’s post as Ben’s was just commentary on Jo’s…
I’ve been named twice now! What did I do? 