New research has revealed why some organisations choose to withdraw money that is invested in a fixed-term deposit before it reaches maturity. Lloyds TSB investigated the reasons why some business customers who had invested in fixed term investments broke the agreement by withdrawing early, and so lost part of their anticipated return. Even though they were only a small proportion of the total number of business investors, the bank wanted to discover their reasons. The bank found that corporate investors typically either withdrew 100% of their money, because they had major problems that affected their business continuity, or around 10% of the total investment because they had miscalculated the short-term working capital they need. John Ramage, Lloyds TSB’s Head of Retail Sales for the UK Corporate Market, said: “The break requests that we received divided into two types: Some wanted their entire investment back because, for example, the business owner had died. The second group had made a bit of calculation error in the amount of general working capital that they needed, or an unexpected bill, and so wanted some cash to tide themselves over. “We found that almost no one asked for half, three quarters, or any other amount of their money – it was either about 10% or all of it.” In response to the research Lloyds TSB, which has a significant share of the corporate market in Jersey, Guernsey and the Isle of Man, has launched a new product. The Partial Withdrawal Fixed Term Deposit has already proved popular in the UK, and an offshore version is now available. The PWFTD is a 12-month deposit account with fixed interest rates, but depositors can make one withdrawal of up to 20% of their investment before maturity without losing interest. Trevor Kirk, Senior Manager of Corporate Banking at Lloyds TSB Isle of Man, said: “Partial withdrawal has proved popular in the UK with certain sectors and we expect to find the same here, and for the same reasons. Trust companies in particular want to earn a good rate of return, and are willing to tie up their money for a year, but they also like having access to some capital because they are often in receipt of unexpected demands for cash from their clients. This new account is ideal for them as it allows a very good rate of return and at the same time provides a cushion for unexpected cash calls. We are already seeing a number of customers taking up this new product because of the flexibility it offers.” [ENDS]