Daily Management Review

Wealthy Clients Of Credit Suisse To Be Charged For Cash Deposits


10/18/2019




Many countries of the world currently are in the negative rate environment.
 
Credit Suisse is one such bank that is under such a regimen. The banker has recently announced that it will no longer bear all the burden of negative rates but will pass it on to some of the richer customers who have large cash deposits with the bank in Swiss francs. It is the latest Swiss bank to pass on the negative interest rates to its clients.
 
Switzerland's second biggest lender said that those customer who currently have a cash deposit balance of above 2 million Swiss francs ($2.02 million) will be charged at a rate of -0.75 per cent  on charges will be levied n customers with less than 2 million francs in balance. Business customers with balances above 10 million francs will be charged a t a rate of -0.85 per cent the bank said.
 
For individual customers, the charges will be effective from January 1 while it will be implemented from November 15 for business customers.
 
Earlier in July this year, Credit Suisse's rival UBS had announced that it would charge money on deposits above 2 million francs at -0.75 per cent rate while private customers with balances above 500,000 francs are charged a fee by Postfinance.
 
Negative official rates are being passed on to corporate depositors by a number of banks in Switzerland as well as at other places in the eurozone even though most of the larger banks have so far refrained from passing on the burden of the negative interest rates to individual customers.
 
"As other banks have been doing for some time, Credit Suisse is introducing negative interest rates for clients with very high Swiss franc cash holdings," Credit Suisse said on Friday. "The reason for this is the persistent negative interest rate environment," it said.
 
A negative rate of interest of -0.75 per cent is being charged by the Swiss National Bank (SNB) on all deposits that are parked with the central bank by commercial banks overnight since January 2015. This is one of the methods that is used by SNB to reduce affinity of investors for the Swiss franc.
 
In order to prevent further strengthening of the safe-haven currency, a large section of the economists and analysts forecast that the interest rate, which is already in the negative, will be lowered further by SNB. The government and policy makers fear that Switzerland's export-reliant economy could be damaged by the tendency of investors to opt for the Swiss franc and hence this strategy of negative interest rates.
 
(Source:www.kfga.com)






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