The Phaserl


Two More Banks Start Charging Select Clients For Holding Cash

from ZeroHedge:

Last weekend, when we reported that Germany’s Raiffeisenbank Gmund am Tegernsee – a community bank in southern Germany – said it would start charging retail clients a fee of 0.4% on deposits of more than €100,000 we said that “now that a German banks has finally breached the retail depositor NIRP barrier, expect many more banks to follow.” Not even a week later, not one but two large banks have done just that.

Overnight, the Irish Times reported that Bank of Ireland is set to become the first domestic financial institution to pass on the ECB’s negative rates to customers for placing their money on deposit with the bank. The newspaper has learned that Bank of Ireland, which is 14% owned by the State, has informed its large corporate and institutional customers that it plans to charge them a negative rate of -0.1% for deposits of €10 million or more starting in October.

As with all other banks, initially only a small group of customers will be affected by the charge and while the bank has indicated that it has no plans to levy a negative interest rate on either personal or SME customers, increasingly more banks are lowering the threshold of eligibility (for example, the German community bank is now charging those with only €100,000 in the bank: low long until the minimum required balance is €10,000 or lower). However, as the Irish Times notes, this will be the first time an Irish-owned institution has applied a negative interest rate on deposits, breaking the long-held tradition of a bank paying customers to hold their money. A spokesman for Bank of Ireland said its policy was not to comment on its pricing but “we keep all our rates under review”.

Ulster Bank, which is owned by UK lender Royal Bank of Scotland, has already quietly introduced negative interest rates for a small number of large corporate clients. Ulster Bank has products priced off the back of Euribor, a European interbank lending rate, which is at an all-time low and turned negative last year. This charge by the bank does not apply to SMEs or personal customers.

Additionally, as Bloomberg reports, Royal Bank of Scotland, Britain’s largest taxpayer-owned lender, said some of its biggest trading clients must pay interest on collateral as a consequence of low central bank interest rates. Some of the bank’s institutional clients will need to pay interest on funds pledged as collateral when trading futures contracts, the bank said in an e-mailed statement on Friday. The changes for sterling and euro futures and options trading will probably affect about 60 large clients, a person with knowledge of the matter said earlier Friday.

“Due to the sustained low interest rate environment, RBS will now be passing the cost of holding such deposits onto a limited number of our institutional clients,” the bank said in the statement. RBS said it had previously applied a zero percent floor to the overnight rate charged for collateral required by clearinghouses for future traders.

As the FT adds, this is the first sign the Bank of England’s decision to cut rates to historic lows is forcing lenders to collect negative interest from deposit holders.

Ironically, unlike Europe, the UK’s rates are (still) positive, even though the BOE recently cut the interest rate to an all time low of 0.25%, as it unveiled it would resume monetizing government and corporate bonds. It may soon cut rates to negative.

And while the RBS move affects only a subset of business customers, some lenders in Europe, where both the European Central Bank and the Swiss National Bank have kept interest rates below zero for months, have been charging a wider array of customers to hold their deposits.

“What you’re seeing is there have been a few banks in Germany and a couple in Switzerland which have started to charge for deposits; importantly, it’s to corporate customers, or very wealthy people,” said Andrew Lowe, an analyst at Berenberg, quoted by the FT. “You are likely to see the UK banks follow suit, in particular if rates fall further,” he added. “Everything that applies to Europe applies to UK banks as well.”

And, after a certain period of time passes, it will also apply to less than “very wealthy people.”

The RBS charges would apply to clients who trade futures and options, and therefore hold cash on deposit as collateral. He said customers were being encouraged to put their cash into bonds instead to avoid the cost. “As you will be aware, there are a number of currencies which now attract negative overnight rates for deposits,” the letter from the bank said.

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4 comments to Two More Banks Start Charging Select Clients For Holding Cash

  • Craig Escaped Detroit

    From ZIRP (Negative Interest Rates)
    to NIRP (Negative Interest Rates)
    and now… BURP (Bullion Under the Rear Porch).

    There’s a freight train coming down the tracks, headed right for us, and it’s called “The Venezuela Express”.

    Gonna be here before you know it.

    There’s a BIG FLOCK of SHEEPLE that are SLEEPING on the tracks.
    Sliced mutton is gonna be “on sale”.

  • Craig Escaped Detroit

    sorry for the “typo” (ZIRP is supposed to say ZERO interest rates.)

    I was typing faster than I was thinking.

    • Craig Escaped Detroit

      Yes, you bring up a valid point, so I’ll match it.

      Even though the “government mint” can shut down, it’s not going to stop all the private mints, businesses who buy bulk metal and turn it into retail products to make a profit.

      The mines and refineries still have a business to operate, so all those tons will just keep flowing to all the other directions.

      We are all aware that at some point, the government may “nationalize” the mines and refineries and starve all the private mints out of business. This is why we stack early and often.

      For those people who buy ONLY government minted products, they will have to either buy the products they don’t appreciate, or hold their FIAT until the BEAST releases more products.

      As for me, I have not spent any of MY fiats to feed the beast, and I have been buying ONLY private minted products to get MORE ounces for my fiat (lower premiums), and at the same time, I think EVERY dollar that stays OUT of the government mint (part of the beast) is a good idea.

      We pretty much can see that the government mint action is BS. But those of us who like the Buffalo rounds, and many other private branded 999 gold & silver, we are not concerned, and the flow of refined metal increasingly going to the private mints, may actually DECREASE the “premiums” charged by those mints if they end up with large OVER-stocks of materials that they need to push out the door to pay their own bills.

      The ONLY advantage I see in having the “Eagles”, is that they (temporarily) enjoy some tax benefits, or other legalities (which can evaporate in the blink of an eye.)

      When we are doing the “Venezuela thing”, and sell some of our PM’s, the buyer will NOT care about the images stamped on the metal, he will only care about the digits on the scale and pay us according to the ounces and grams. (and THAT’s why I don’t buy “Eagles”)

      When the future gets here, and silver is desperately needed for industries, it will not make any difference to the MELTING FURNACE which image was on the metal. It’s going to end up in electronics, solar panels, circuit boards, etc. Those pretty looking “Eagle images” will melt just as fast as the image of a Dog, Buffalo, Indian, Pretty Girl, or silver spoons, forks, candle sticks, etc.

      Stack em when you can, sell them only when you must (or when the day comes when the metals are actually OVER VALUED and have become a TRUE BUBBLE will be the right time to get rid of them.)

      Buy food, be ready.

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