Credit Suisse has become the latest Swiss bank to charge wealthy clients for their deposits in response to the country’s monetary policy.
The Swiss National Bank (SNB) has been charging negative interest rates since 2015 on money it holds on behalf of commercial banks, costing them CHF2 billion a year, according to the Swiss Bankers Association.
UBS and PostFinance have both begun passing on the cost of those rates to their wealthiest clients — and Switzerland’s second biggest lender is now following suit. From Nov. 15, corporate clients of Credit Suisse will be charged -0.85% interest on cash holdings above CHF10 million ($10 million), while, effective Jan. 1, 2020, individuals will face -0.75% rates on savings accounts above CHF2 million.
“In line with the approach that has long been followed by other banks, Credit Suisse is now also introducing negative interest rates for clients with very large CHF cash holdings,” the bank said Friday. “The reason for this is the persistent negative interest rate environment.”
As Swissinfo reports, the SNB has been charging negative interest to prevent the Swiss franc from increasing in value against other currencies and, despite complaints from the financial industry, the policy “looks set to stay in place for the immediate future.”
“Many economists expect the SNB to take the interest rate lower next year to prevent further strengthening of the safe-haven currency, which could damage Switzerland’s export-reliant economy,” Reuters said.
Former Credit Suisse CEO Oswald Greubel blasted the central bank, saying negative interest rates are “crazy.”
“That means money is not worth anything any more,” he told Swiss newspaper NZZ am Sonntag, adding that “As long as we have negative interest rates, the financial industry will continue to shrink.”
UBS charges a -0.75% rate on deposits above 2 million francs, while PostFinance charges fees to private customers with balances above 500,000 francs.
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