PERMANENT TSB is hoping to attract more savers to the bank with a new fixed-term deposit account that pays the interest at the beginning of the term.

The bank said the move is part of its strategy to increase its retail deposits.

The 12-month Interest First Savings Account pays the interest within a month of opening the account.

Permanent TSB expects customers to invest up to €1 billion in the product over the next year, costing it a total of €33.5 million in interest payouts before Deposit Interest Retention Tax (Dirt).

The account comes with a minimum deposit threshold of €10,000 and will pay out interest at 3.35 per cent gross or 3.46 per cent annual equivalent rate (AER).

However, savers will find their money locked in for a year as one of the account’s conditions is that it does not allow withdrawals before the end of term.

Permanent TSB’s head of business strategy Niall O’Grady said the bank was seeking to bring innovation to the market.

“Retail deposits is the priority growth area for us at the moment,” said Mr O’Grady.

“We can’t be coming to customers with the same standard product all the time.”

Permanent TSB’s research found the average deposit customers held was €60,000.

It estimates the average customer will receive a payment of up to €1,500.

Permanent TSB recorded an operating loss of €270 million last year, driven by the cost of making a €376 million provision for impaired loans.

Before these provisions the bank had made a profit of €106 million.