NS&I says there is more competition for savings
The flight to safety by savers who lost faith in the traditional banking sector is over, government-backed National Savings & Investments (NS&I) has said.
NS&I, which runs Premium Bonds and a variety of savings products, said in its annual report it had been hurt by a return of confidence in banks.
Customers ploughed money into NS&I at the height of the crisis because they saw it as a haven for savings.
But in the past three months, they have withdrawn more than they have put in.
NS&I, which sees its profits go to the Treasury, experienced inflows of £26bn in the 2008-9 financial year and reported a £12.5bn net financing surplus.
But it said there was now a "more challenging savings environment", as it reported £4.5bn in gross outflows of cash in the three months to the end of June, which outstripped inflows of £3.2bn over the same quarter.
At the height of the global financial crisis last September, savers were dividing and moving their funds because of concerns over the future of some banks.
Despite government guarantees that savings were safe, many moved their cash to NS&I and other government-backed institutions such as Northern Rock.
"The most important thing for us was throughout the financial crisis to stay open for business," NS&I chief executive Jane Platt told the BBC.
"We looked very carefully at setting rates, balancing the interests of consumers, taxpayers and financial stability."
Some banks and building societies were unhappy about the perceived extra safety of NS&I, but it did not launch any extra marketing as a result.
Ms Platt said that there had now been a clear change in the picture for savers.
"We have seen a major shift in the market in the first quarter of the year which is a good thing because confidence is a returning to the financial services sector," she said.
Banks and building societies have been offering more attractive interest rates in an attempt to attract more depositors, with a string of new savings products being launched with interest well above the Bank rate of 0.5%.
"While it remains the case that many savings accounts are languishing with very low interest rates, pro-active savers can still get good deals if they are prepared to move their funds around to new accounts," said David Black, of financial data company Defaqto.
But he alerted savers to the fact that many of these deals were only available to new customers, not to people shifting their funds from a different account within the same bank.
Others offer an introductory bonus, that gives a high interest rate for a limited amount of time after opening an account.
"Many of the variable rate savings accounts that get into the best buy tables are either new launches or are there by way of offering an introductory bonus," Mr Black said.
A survey of 2,156 people by the Department for Work and Pensions found that half of young UK adults aged between 18 and 34 were worried about their long-term financial future and nearly two thirds were not confident they were saving enough.
Although many were long-term savers, two in five admitted the need to curb their spending and save a bit more for the future.