Frankfurt Commerzbank board member Thomas Schaufler does not want to completely give up the instrument of custody fees for emergencies. However, as with other financial institutions, savers can look forward to higher interest rates on savings again at Commerzbank as part of the interest rate turnaround initiated by the European Central Bank (ECB). “We are beginning to pass on interest to customers again,” said Schaufler of the German Press Agency in Frankfurt.
The manager, who has been in office for a good year, said: “In a situation where liquidity costs money, we as banks have a hard time if we hadn’t had this tool in our toolbox.” Schaufler emphasized: “But it’s not a tool – and we all agree on that – that we want to get out of the toolbox again in normal times.”
The so-called custody fees, which a number of banks had introduced in the meantime, were a consequence of the ECB’s monetary policy. At times, financial institutions had to pay 0.5 percent interest on money parked at the central bank. Many institutes passed the costs on to their customers. They therefore had to pay interest from a certain amount on the account.
In July 2022, the ECB abolished penalty interest rates, and as a result, commercial banks also eased the fee screw again. Commerzbank, for example, has not been charging any custody fees since July 2022.
Top jobs of the day
Find the best jobs now and
be notified by email.
The situation for customers has also changed at other banks – financial institutions are now vying for the favor of customers: “We are currently seeing intense competition for investors’ savings, especially among the top providers,” says Oliver Maier from the comparison platform Verivox. Savings interest rates are rising across the board, and according to Maier, there is no immediate end in sight given the competition among financial institutions. “In order not to fall behind, the institutes are forced to continuously improve their conditions.” The downside of higher interest rates: It is expensive for borrowers.
According to a Verivox evaluation, nationwide fixed-term deposit offers with a term of two years now bring an average interest rate of 2.09 percent (as of December 20th). In August it was just 0.82 percent. After years of zero and negative interest rates, call money yields an average of 0.45 percent. However, the high inflation reduces the yield.
Increased overdraft interest
According to the evaluation, regional banks are lagging behind. The average interest rate for two-year time deposits at Volksbanks, Raiffeisenbanks and Sparda banks is 1.14 percent. Savings banks pay an average of 1.21 percent for fixed-term deposits. On average, the call money interest rates at regional institutes are just above the zero line.
“The regional banks have to be careful that customers don’t run away from them,” says Maier. “Several competitors are currently advertising with fighting conditions and are trying to steal customers away from the other banks,” says the managing director of Verivox Finanzvergleich GmbH. According to its own statements, Verivox evaluates all 700 banks with overnight and fixed-term deposit offers that publish their interest rates online. The consumer portal Biallo also reports rising interest rates.
According to data from the comparison portal Check24, for example, an installment loan of 10,000 euros with a term of 60 months costs 187 euros a month if taken out in January. For a loan with the same amount and term, 196 euros per month were due in mid-December.
Stiftung Warentest states significantly increased overdraft interest for overdrafts granted by banks. “If credit institutions are currently increasing overdraft rates, they will do so with equal force. The momentum has increased since May,” reported Heike Nicodemus from the foundation’s “Finanztest” magazine recently. According to an evaluation (as of December 21) of a good 450 account models at 171 banks, the financial institutions currently charge an average of 9.94 percent overdraft interest. In May, before the current account investigation by “Finanztest”, it was 9.25 percent in a random sample.
Consumer advocates want to rule out custody fees for private customers in the future. Six lawsuits by the Federation of Consumer Organizations (vzbv) are currently pending on the subject. “We see no reason to withdraw lawsuits as long as banks do not recognize our claim as justified or issue declarations of discontinuance,” emphasizes vzbv legal officer David Bode. “We doubt that the custody fees are actually due to the interest rate on deposits at the central bank, especially since the ECB has granted banks high tax exemptions since 2019.”
More: ING announces end of zero interest rates for December