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Strong criticism of Nordea's new savings product – shift risks to customers and other hidden charges

Monday, 28 May 2012
Nordea's bank which saw its credit rating reduced recently has attracted more criticism from Swedish authorities for some of its products directed to small businesses according to various reports.
The product which showed lower risks and higher interest rates saw many smaller investors flucking to the bank’s product. But now harsh criticism has been directed against the new savings product according to reports.

"It is an irresponsible hoax against our own customers. It is unreasonable conditions, and the bank masks the risks, "said a highly placed source within the Nordea to Swedish television.

The source, who made contact with the Swedish television, says the bank is shifting its responsibilities, luring customers with a risk that they will find hard to evaluate.

The report said that Nordea has in two months issued the interest attractive deals worth a billion, reports Swedish television.
In most cases, in terms of deposits and loans, the bank takes the risk - it is one of the basic ideas of the banking system. Many customers deposit money, many clients borrow and if such a company goes bankrupt and can not pay their loans, the bank takes all the risk. The bank has large divisions with experts at assessing risk. As the bank has so many customers, it is held that it can handle a certain amount crashed loans. Overall, it evens out such that the bank still earns money. And above all - no small investors suffer and lose their money.

But with the interest-proof product, small investors are taking the credit risk of the company. If the company goes bankrupt or can not pay, individuals in the company will loose their money and if there is any personal deposit somewhere, they will not get it back.

Also the government's deposit, which is available on savings accounts, does not apply to the Nordea’s interest-proof product.

The Swedish organization Aktiespararna (stock and share savers) is very critical of the action of the bank.
"It is useless for the customer, but surely a good idea for shareholders, "said managing director GŁnther Marder to Swedish television.

The government's deposit insurance, on ordinary savings accounts, does not include interest-proof, meaning that the money goes up in smoke if the company goes bankrupt.

Nordea's communications director Jan Larsson emphasizes that interest the evidence is just one of many securities in the bank line and says to Swedish television that Nordea informs its customers about the risks and conditions that exist.

But the question is that with these types of risks associated with this type of account, why will many customers flock there against a normal risk free account which also has government guarantee?
By Team

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