Bank customer Sonja Graf * received the letter from Bern last November. As a result, your house bank Postfinance lowers the threshold for negative interest on private and savings accounts from CHF 500,000 to CHF 250,000 as of December 1st.
More and more bank customers are confronted with such bad news in Germany. Like Postfinance, banks use the fine-tuned term credit fees instead of negative interest. Also typical: As with Postfinance, customers who do not purchase any other services apart from a savings account have to fall behind.
However, anyone who buys other banking products such as funds or mortgages will be waived the negative interest. A cow trade or a mild form of blackmail – depending on the view.
Negative interest rates go quickly into the money
As customer Graf had CHF 260,000 in her account, she had to face annual penalties for negative interest rates of 1 percent of Postfinance. In their case, this is only CHF 100, as the first 250,000 are «free». But having to pay to be able to give your money to the bank is a stomachache for many savers. Because they actually want their money to generate returns. Because the Swiss National Bank (SNB) cannot get out of negative interest rates before the European Central Bank (ECB), nothing will change so quickly about the depressing situation – the savings will melt from year to year.
Graf therefore transferred CHF 30,000 to her private account with the Zürcher Kantonalbank (ZKB). “The ZKB will probably not jump on the negative interest rate so quickly,” she thought. But she was wrong. At the beginning of December, depending on the customer relationship, ZKB introduced negative interest from CHF 100,000. Although she had a little over CHF 100,000 in her account, her client advisor said she was not currently affected. But how much longer?
The search for banks that do not incur any penalty interest is becoming increasingly difficult for customers. The thresholds for negative interest rates at large and private banks have long been known. However, only a few of the retail banks, such as the Graubünden Kantonalbank (threshold CHF 250,000), disclosed their regime.
More and more bank customers affected
Nevertheless, it is hardly possible for affected customers to escape the negative interest rates at another bank. No institute completely foregoes negative interest rates for private customers, as a BLICK survey shows for all major financial institutions. At Lucerne Cantonal Bank, 0.4 percent (1,300) of 300,000 customers have had to pay negative interest. At the ZKB there are around 2500.
Raiffeisen customers are not immune either. The head office advises its cooperative banks not to charge negative interest on private savings. But individual cooperatives saythat they charge negative interest at most on assets over CHF 1 million, especially for new customers. Raiffeisenbank Winterthur supplemented its general terms and conditions overnight with the option of «One-sided negative interest rates to introduce on customer deposits », This was reported by the portal «Inside Paradeplatz».
Bank customers must expect a letter like Graf received in the near future. Because it is clear: the banks are steadily expanding the proportion of customers who are charged with negative interest rates, even if most would not say so out loud.
The transparency of the Luzerner Kantonalbank is an exception. “We expect the number of agreements to move from 0.4 percent today to 1 percent and then 2 percent in the medium term,” says LUKB spokesman Daniel von Arx.
With its individual provisions, LUKB’s negative interest rate policy is no more transparent than that of the competition.
Unconcrete small print
At St. Galler Kantonalbank, the fine print says: “Depending on the amount of the credit, a credit fee (negative interest) may be charged.” But what the criteria for this in the end remains secret at SGKB.
Economist Mathias Binswanger (57) from the University of Applied Sciences Northwestern Switzerland says: “The conditions for charging negative interest rates should be transparent, as should the fees.” To date, this has not been the case enough. He is of the opinion that the banks do not need to borrow negative interest from private customers.
Another view is Adriel Jost (34). From the perspective of the Wellershoff & Partners consultant, the banks’ negative interest rates are correct. “It would be negligent if a bank kept customers with whom it would lose money overall,” says the economist.
Exploitation of market power?
Business lawyer Peter V. Kunz (54) agrees. However, he sees a legal problem that has so far been neglected. If all banks behave in the same way and introduce negative interest rates, either by agreement or other agreement (“gentlemen’s agreement”), there could be problems under antitrust law.
“Because the banks are playing a common market power and blocking competition,” says Kunz. The Competition Commission and the Financial Market Authority should look at this issue, he says.
Customer Graf decided to invest part of the money at Postfinance as a preventive measure in securities. No coincidence: the bank had a limited offer with low investment commissions for customers like her. “Actually, I deepened a partnership that I never wanted,” she says, disillusioned.
* Name changed by the editors
The banks’ whining about negative interest rates is questionable for several reasons. The banks of the National Bank have been paying something when they parked their money since the introduction of penalty interest around five years ago. But every bank has a tax-free allowance, on which they do not have to pay the National Bank a penalty interest rate of 0.75 percent.
Some banks do not use the exemption themselves, but for profitable active management – for example, to park short-term investments by third parties.
Economist Mathias Binswanger (57) from the University of Applied Sciences Northwestern Switzerland currently sees no good reason why customers should also pay negative interest in addition to account fees. On top of that, banks have had to pay significantly less negative interest to the SNB since the beginning of November last year due to an adjustment to the allowances.
Pressure comes from the mortgage market
According to Binswanger’s calculation, the banks’ annual negative interest payments to the SNB fell from around CHF 2 billion to CHF 1 billion. “This is a great relief,” he says. The adjustment would have about the same effect for the banks as if the SNB had raised the negative interest rate to –0.4 percent and thus to the level of the European Central Bank.
Anyway, it is only half the truth if the banks justify the negative interest rates for their customers with their interest payments to the SNB. “The increased financial pressure on the banks in 2019 stems more from the increasing competition in the highly competitive market for mortgage loans,” explains Binswanger. This pushed interest rates further down. Therefore, the search for new sources of income is only logical. Claudia Gnehm