Frankfurt The end of negative interest rates for private savers is approaching. With the Sparda-Bank West, a large cooperative bank for private customers has announced that it will refrain entirely from negative interest rates from next month. The bank announced on Friday that it would “raise the custody fee on current accounts and the negative interest on overnight money accounts to 0.0 percent per year from July 1, 2022 and thus refrain from negative interest on these deposits until further notice”.
With this step, Sparda-Bank West is reacting to the announcement by the ECB that it will raise interest rates this year. Bank boss Manfred Stevermann explained that with the introduction of custody fees and negative interest, Sparda-Bank had passed on the costs of interest expenses to its customers with large deposits. “Since this transfer will no longer be necessary for the time being, we are adjusting the custody fee and the negative interest rate of Sparda-Bank West.”
The Düsseldorf money house, which is one of the ten largest cooperative banks in Germany, had around 660,000 customers at the end of 2021. So far, it has calculated negative interest on current accounts for sums above 25,000 euros. The corresponding allowance on the call money account is EUR 50,000.
In view of the high inflation, the ECB announced last week that it would end its multi-billion dollar bond purchases on July 1 after many years of ultra-loose monetary policy. In addition, the key interest rates are to rise by a quarter of a percentage point as a first step. The decisive factor is currently the interest rate for commercial bank deposits at the central bank, which is minus 0.5 percent.
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Many banks have contractually linked custody fees to ECB interest rates
ECB President Christine Lagarde announced another, even stronger interest rate hike for September if the inflation outlook does not improve by then. A rate hike of 0.5 percentage points is therefore likely in the fall.
After Sparda-Bank West, Sparda-Bank Nuremberg also announced on Friday that it would no longer charge negative interest from July. She introduced a custody fee in April. The Sparda-Bank Nuremberg even announced a bonus on deposits to call money – a sign that the money house is interested in collecting fresh deposits. The credit institutions have so far wanted to prevent high inflows of funds with negative interest rates.
So far, only a few financial institutions have already abolished negative interest rates for private customers in anticipation of the interest rate hikes. With regard to the online price lists, the comparison portal Verivox now registers 18 credit institutions that have eliminated negative interest rates or significantly increased the allowances – or want to do so in July. At the beginning of June there were still nine banks.
The online bank ING Germany caused a stir in mid-May. It was the first large private customer bank to announce that it would eliminate the custody fee for the vast majority of customers. As of July, ING will raise the allowances for current and call money accounts from the current 50,000 to 500,000 euros.
However, numerous financial institutions will only move away from negative interest rates if the ECB’s penalty interest rate is abolished. For example, Deutsche Bank announced in May that the amount of the custody fee is based on the deposit interest rate, the so-called deposit facility, of the ECB.
“If the ECB changes the deposit facility rate, we will adjust the fee in the retail customer business at short notice and, in the event of a deposit facility of zero or more, we will completely refrain from charging a custody fee.” ECB deposit rate linked.
According to Verivox, around 450 and thus a third of the financial institutions examined recently charged negative interest for private customers. In fact, the number is likely to be even higher because not all conditions are published freely accessible on the Internet.
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