Reacting to a deposit-rate war: the recession-induced demand for stable financing has motivated many banks to seek additional deposits. But how do you avoid getting sucked into a classic price war with your competitors? We offer four ways to sidestep this trap--without surrendering your deposits or your profits.

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Reacting to a deposit-rate war: the recession-induced demand for stable financing has motivated many banks to seek additional deposits. But how do you avoid getting sucked into a classic price war with your competitors? We offer four ways to sidestep this trap--without surrendering your deposits or your profits.

THE FINANCIAL AND ECONOMIC CRISIS OF THE LAST TWO YEARS has had a profound impact on all U.S. banks' deposit business. First, the urgent need for stable and reliable sources of refinancing combined with increased capital needs has pushed many banks to refocus on deposit gathering. This has led to a dramatic increase in attractive deposit products.

In parallel to this boost in supply, demand for deposit products has also increased, as customers have shifted towards traditional savings accounts in search of less riskier investments. This customer trend should have helped banks build their deposits while at the same ti...

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