Because of negative interest, even a savings account earning 0% interest is earning too much reckons the bank’s boss.
Soon many banks will be passing on some of the cost of negative interest to their clients, reports 20 Minutes. Migros Bank will need to seriously consider doing the same in 2017.
The bank’s boss Harald Nedwed told the NZZ am Sonntag that the situation is difficult for all Swiss banks reliant on interest margins.
Savings accounts earning zero interest are being subsidised by mortgage borrowers. Pension funds and insurers don’t have this problem, allowing them to offer cheaper mortgages.
Nedwed is considering passing on part of the negative interest to clients. Even though rates have risen slightly recently, he thinks this is probably just a temporary effect due to Donald Trump.
He said that those with small balances had nothing to fear. Those with seven figure balances are the ones that will be affected.
On Saturday, Raiffeisen boss Patrik Gisel rejected this solution. Before looking at this we’ll look at other options he told NZZ. “Raiffeisen’s clients wouldn’t accept negative interest rates.”
In November, Postfinance was the first big Swiss bank to impose negative rates on funds above a certain balance. The bank now charges 1% for funds in excess of one million francs.