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Banks vow negative rates won't be passed on

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Banks vow negative rates won't be passed on
Photo: Yoshiko Kusano/Photopress
08:21 CET+01:00
Major banks in Switzerland say they have no intention of charging small savers negative interest rates in the wake of the Swiss National Bank's decision this week to charge such rates to financial institutions.

The SNB said on Thursday that it would begin applying a negative rate of 0.25 percent next month on large sight deposit balances at the central bank with the aim of bringing the Libor rate — the rate used by banks to lend with each other — into negative territory.

The goal is to reduce the attractiveness of the Swiss franc at a time when currency traders are bidding up its value as a safe haven currency, while the Russian rouble teeters and the euro remains weak.

Switzerland’s high street banks were quick to say they did not plan to apply negative rates to ordinary customers.

“At the moment, we are not planning to introduce negative interest rates on the accounts of individuals and businesses,” a spokesman for PostFinance told the ATS news agency.

UBS, Switzerland’s largest bank, said it also had no intention of imposing such rates on these clients, it said.

A charge for inter-banking clients was introduced two years ago to avoid overly excessive deposits in cash and an evaluation was under way to determine whether to increase this rate or charge a negative interest rate to such clients, ATS said.

A spokesman for Raiffeisen said “even if pressure mounts” the interest rates for its customers will remain positive, the AWP agency reported.

The Zurich cantonal bank (ZKB) also indicated that individual customers and small and medium-sized businesses would not be affected, ATS said.

Meanwhile, unions welcomed the central bank's move to prevent the franc from appreciating in value.

A strong franc hurts Swiss exporting companies by making their products more expensive for customers abroad. 

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