The Irish Times has learned that Bank of Ireland, which is 14 per cent owned by the State, has informed its large corporate and institutional customers that it plans to charge them for deposits of €10 million or more from October.
It is understood that a negative interest rate of 0.1 per cent will be applied to such deposits by Ireland’s biggest bank.
Is this negative rate high enough to affect the behaviour of large depositors?
Is it high enough to cause them to switch banks?
Will other banks follow?
Another point - given zero interest rate, and now negative interest rates, I see some CU still charging 8% on personal loans........
Ulster Bank, the Irish lender that is part of RBS, already imposes negative rates on some large corporates.
Ulster has products priced off Euribor, a European interbank lending rate, which turned negative last year. Ulster’s charges do not apply to small businesses or personal customers.
Is this negative rate high enough to affect the behaviour of large depositors?
Is it high enough to cause them to switch banks?
With 10m average deposit, 0.1% is 10,000 pa.
Will other banks follow?
Another point - given zero interest rate, and now negative interest rates, I see some CU still charging 8% on personal loans........
Well if other countries banks are moving in that direction, then you would have to consider, where could they go? Without unduly disrupting their business operations?
“The moment the bank tells me I have to pay interest on my deposit I’ll take my €50,000 or whatever it is and put it under my pillow, or buy a safe and stick the money inside,” saidDagmar Metzger, a 53-year-old entrepreneur in Munich.
Ms. Metzger, a game hunter, said she would also consider squirreling cash away in her gun cabinet, which has solid locks.
Paying to save is “preposterous,” said Marlene Marek, 58, owner of a Frankfurt bistro. “I would rather withdraw my money and stash it at home, or keep it in a safe-deposit box at a bank.”
In recent months, the South African-owned Investec Bank - which operates here - started to charge its institutional and corporate customers for large deposits kept in its demand and short-term deposit accounts.
A spokeswoman for the Belgian-owned KBC said the bank "does not currently" apply negative deposit interest rates to any personal, business or corporate deposits. "KBC reviews all product pricings on a continuous basis," she added.
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