Would you pay to keep money in a bank? Would you contribute to your bank’s “stability” by paying them to hold your hard-earned kronor? So far, banks have passed on passing on negative interest rates to customers’ regular savings accounts, but rumours have begun to circulate that having to pay a bank to hold on to your savings isn’t as foreign a concept as once thought.
The article on Bloomberg’s website spells it out clearly “Depositors are next as Nordic Banks Buckle Under Negative Rates“. The question is, do the banks dare to make people pay to have an account? Who will be the first to try it, and risk the ire of their customers? Will customers actually accept it?
The Swedish central bank’s Stefan Ingves has stubbornly held on to his idea of negative interest rates, even when even his inner circle is divided on the issue. Previously, it was held that it was good for Sweden’s exports, as the weak krona (due, in many ways, to the negative interest rate) makes Swedish products seem inexpensive. But even business owners have begun to complain, finding that their product is almost working under false pretences, and that it is harder to price against the market. At first, it seemed great, but now, after some time has passed, not so much.
Banks have made money with the negative rates by relying on asset management and other fee-generating products, Bloomberg reports. But that stream might not now be strong enough. The director of the Danish Bankers’ Association is quoted as saying “banks are selling their products below cost price” – something that can’t be kept up. So far, though, only Credit Suisse has said it will impose a cost on its customers – those that have over a million Euro in deposits.
So far so good, for most people, obviously. But only just as long as it stays at that level. As we now appear to be heading into a sort of economic slowdown, and things may get tight, this is not as sure as the expression “like money in the bank” once implied.
Update August 20 – DN.se reports that that Danish bank Jyske is now implementing a negative interest rate for its customers that have over 7.5 million kronor (about 10 million Swedish kronor, or about a million bucks) in the bank (). A customer that has 8 million kronor will pay about 48 thousand kronor to keep their money there.