Post Office Savings Bank


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The Post Office Savings Bank (POSB), part of the Postal Services Department, was established on 1 January 1877 by the British Colonial Government. POSB had been a key promoter of thrift among the general population of Singapore.

In the Colonial Government Gazette published in 1900, it stated that POSB had 1,919 accounts with $330,000 in deposit. During the year, 715 new accounts were opened and 655 closed. Amount credited to depositors as interest was $9,300. POSB depositors got an interest rate of 2.5% per annum.

After the fall of Singapore to the Japanese, POSB was able to continue functioning. Withdrawal done in British Sterling transaction. In October 1945, after the Japanese surrendered, reopened for business. The books was audited and depositors account were rehabilitated. By 1951 it had its 100,000th depositor.

As at the end of 1963, a total of $43.3 million was deposited in Singapore with 235,000 depositor.

In 1965, POSB adjusted their interest rates upwards to 3%.

After Singapore independence, the then Minister for Finance Goh Keng Swee, who rediscovered the potential of the bank to develop the infrastructure of the city-state.

In 1966, the control of POSB was transferred to Singapore’s Postmaster-General. POSB introduces the School’s Saving Competition which was aim to inculcate the habit of savings and virtue of thrift amongst students. Cash prices is awarded to the school directly to the winning school.

In 1968, interest rate for saving accounts was adjusted upwards from 3% to 4% per year.

In 1972, POSB was made a statutory board under the Ministry of Communications and took-over the $83 million in deposits. POSB main objectives are to encourage thrift and to mobilise domestic savings for public development. By the end of 1972, POSB has 46 branches islandwide to serve more than 600,000 depositors with a total of S$115 Million Dollars in deposit. POSB implemented their computerised accounting system.

In 1974, POSB was transferred to become part of the Ministry of Finance and Credit POSB Pte Ltd was established in the same year to provide custom-tailored loans relating to HDB housing ownership. POSB also raise the interest rate to 4.5% p.a. for deposit on 1st Jan, 5% in July and 8% in August.

On 1st July 1975, POSB dropped its interest rate back to 5.5% per annum.

In 1976, POSB had one million depositors, while deposits crossed the S$1 billion mark.

On 1 September 1978, POSB introduced a 2-tier interest rate with a 5.25% p.a. for the first $100,000 deposit and 3.5% for the subsequent amount.

On 1 September 1979, POSB revised the 2-tier interest rate upwards with a 6% p.a. for the first $100,000 deposit and 4.25% for the subsequent amount.

In 1980, it introduced the Passcard, and set-up the Principal Branch. On 1 May 1980, POSB revised the 2-tier interest rate upwards with a 7% p.a. for the first $100,000 deposit and 5% for the subsequent amount. And again on 1 December 1980, POSB revised upwards the 2-tier interest rate upwards with a 8.5% p.a. for the first $100,000 deposit and 6% for the subsequent amount.

In 1981, its first Cash-On-Line ATM opened at the Newton Branch. On 1 July 1981, POSB revised the 2-tier interest rate upwards with a 9% p.a. for the first $100,000 deposit and 6.5% for the subsequent amount.

On 1 August 1981, POSB revised the 2-tier interest rate upwards with a 9.5% p.a. for the first $100,000 deposit and 7% for the subsequent amount. This was a historical moment for the Saver – the highest ever interest rates from POSB. And the interest income was tax free!

By end of 1981, total deposits reached S$3.3 billion.

On 1 January 1982, POSB cut the 2-tier interest rate downwards with a 8.5% p.a. for the first $100,000 deposit and 7% for the subsequent amount. And again on 1 September 1982, POSB cut the 2-tier interest rate downwards with a 7.5% p.a. for the first $100,000 deposit and 6% for the subsequent amount. And one more time on 1 October 1982, POSB cut the 2-tier interest rate downwards with a 7% p.a. for the first $100,000 deposit and 5.5% for the subsequent amount.

In 1983, its headquarter was shifted from Middle Road to the new 8-storey complex, the POSB Centre at Bras Basah Road. Deposits crossed the S$5 billion mark (see chart below). On 1 March 1983, POSB cut interest rate to 6.5% p.a. for the first $100,000 deposit and 5.5% for the subsequent amount. The Government turn down the idea of converting POSB to a full commercial bank.

In 1984, the current account facility was introduced, and by 1986, deposits crossed the S$10 billion mark. On 1 October 1984, POSB raise the 2-tier interest rate downwards with a 6.75% p.a. for the first $100,000 deposit and 5.75% for the subsequent amount.

On 1 March 1985, POSB trim the 2-tier interest rate downwards with a 6.25% p.a. for the first $100,000 deposit and 5% for the subsequent amount. And again on 1 June 1985, POSB adjusted the 2-tier interest rate downwards with a 5.75% p.a. for the first $100,000 deposit and 4.5% for the subsequent amount. And once more on 1 October 1985, POSB adjusted the 2-tier interest rate downwards with a 5.25% p.a. for the first $100,000 deposit and 4% for the subsequent amount.

On 1 April 1986, POSB adjusted the 2-tier interest rate downwards with a 5% p.a. for the first $100,000 deposit and 3.75% for the subsequent amount. And so again on 1 August 1986, POSB adjusted the 2-tier interest rate downwards with a 4.5% p.a. for the first $100,000 deposit and 3.75% for the subsequent amount. And one more time on 1 October 1986, POSB adjusted the 2-tier interest rate downwards with a 3.75% p.a. for the first $100,000 deposit and 2.75% for the subsequent amount. The first time below 4% mark since 1972!

On 1 November 1986, POSB adjusted the 2-tier interest rate downwards with a 3.25% p.a. for the first $100,000 deposit and 2.75% for the subsequent amount.

On 1 April 1988, POSB adjusted the 2-tier interest rate downwards with a 3% p.a. for the first $100,000 deposit and 2% for the subsequent amount.

According the the protractors, it makes them more of a “real” bank. On 1 December 1989, POSB adjusted the 2-tier interest rate upwards with a 3.25% p.a. for the first $100,000 deposit and 2.25% for the subsequent amount.

From 1 January 1990, POSB will start using compound interest in paying to depositor.

The Post Office Savings Bank (POSB) was officially renamed as POSBank in March 1990. The word “Savings Bank” was dropped. On 1 June 1990, POSB adjusted the 2-tier interest rate upwards with a 4% p.a. for the first $100,000 deposit and 3% for the subsequent amount.

On 1 October 1991, POSBank adjusted the 2-tier interest rate upwards with a 3.75% p.a. for the first $100,000 deposit and 2.75% for the subsequent amount.

On 1 January 1992, POSBank adjusted the 2-tier interest rate downwards with a 3.25% p.a. for the first $100,000 deposit and 2% for the subsequent amount.

On 1 August 1992, POSBank adjusted the 2-tier interest rate downwards with a 3% p.a. for the first $100,000 deposit and 1.75% for the subsequent amount.

On 1 April 1993, POSBank adjusted the 2-tier interest rate downwards with a 2.25% p.a. for the first $100,000 deposit and 1.5% for the subsequent amount.

On 1 May 1994, POSBank adjusted the 2-tier interest rate upwards with a 2.5% p.a. for the first $100,000 deposit and 1.75% for the subsequent amount. Once more on 1 October 1994, POSBank adjusted the 2-tier interest rate upwards with a 2.75% p.a. for the first $100,000 deposit and 2% for the subsequent amount. And again on 1 December 1994, POSBank adjusted the 2-tier interest rate upwards with a 3% p.a. for the first $100,000 deposit and 2.25% for the subsequent amount.

On 1 April 1996, POSBank adjusted the 2-tier interest rate downwards with a 2.75% p.a. for the first $100,000 deposit and 2.25% for the subsequent amount.

On 1 October 1997, POSBank adjusted the 2-tier interest rate downwards with a 3% p.a. for the first $100,000 deposit and 2.5% for the subsequent amount.

As the Asian crisis intensified, commercial bank interest rates rose. The gap between interest rates offered on POSBank savings accounts and commercial bank fixed deposits widened. Consequently, POSBank began losing its bigger depositors who accounted for most of its deposits.

On 1 March 1998, POSBank was forced to reverse its policy of paying smaller accounts higher interest, and instead paid large accounts a higher interest rate than for small accounts to offer big savers higher interest rate. 3.75% on balances up to $100,000, and 4.125% on balances above $100,000.

On 1 April 1998, 3.75% on balances up to $50,000, 4.125% interest was also extended to balances over $50,000.

On 15 September 1998, POSBank adjusted the 2-tier interest rate downwards with a 3% p.a. for the first $50,000 deposit and 3.5% for the subsequent amount.

POSBank was subsequently fully acquired by (or merged with) DBS Bank on 16 November 1998 for S$1.6 billion; at the same time, ceased to exist as a statutory board under the Ministry of Finance. POSBank, AKA POSB, lives on as a member of DBS…

I, (DBS), take you (POSB), to be my (Brand), to have and to hold from this day forward, for better or for worse, for richer, for poorer, in sickness and in health, to love and to cherish; from this day forward until death do us part.

Witnessing the event were Finance Minister Dr. Richard Hu and DBS Bank Chairman Mr. S. Dhanabalan.

This event also marks the end of Savings Bank concept in Singapore. And welcome the new era of low interest loans in Singapore… and gone are the nearly 10% interest payable to the saving deposit.

Mr. S. Dhanabalan, the Chairman of DBS Bank, declared that “POSBank cannot remain the way it is”. To start the ball rolling down hill, DBS announced on 18 November 1998 that POSBank Savings Account Balances, which is still tax-exempted, for the first $50,000 is at 2.25% p.a. down 0.5% and in excess of $50,000 at 2.25%. And swiftly on 10 December 1998 that POSBank Savings Account Balances for the first $50,000 adjusted downward to 1.5% p.a. and deposit in excess of $50,000 at 1.75%.

On 4 Janunary 1999, DBS Bank adjusted the POSBank 2-tier interest rate downwards with a 1.125% p.a. for the first $50,000 deposit and 1.375% for the subsequent amount.

Source: mas.gov.sg

By year 2000, the interest rates for POSBank saving accounts has dropped below 1%. And it continued drifting to near zero and housing loans to below 4% p.a. This is bad news for saver but good news for property (speculators) investors.

Goodbye Post Office Savings Bank of Singapore. We love you, once.

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