Financial institutions react: the end of negative interest rates is near

Status: 13/06/2022 15:06

ECB-announced interest rate turnaround lifts bank customers: Deutsche Bank also announced an end to negative interest rates. Hundreds of other institutes could follow.

Bank customers in Germany can look forward to an end to negative interest rates on current and overnight accounts amid the interest rate hike announced by the European Central Bank (ECB) for July. “The custodian fee amount is based on the European Central Bank’s so-called deposit structure,” a spokesman for the bank announced today. “If the ECB raises the deposit rate by 0.25 percentage points as per its recent announcement in July, Deutsche Bank and Postbank will pass this adjustment on to their retail clients and reduce the custody fee by 0.25 percentage points in the short term. “.

Banks currently still have to pay 0.5 percent interest if they deposit central bank money that is not required in the short term with the ECB. Some institutions pass on the costs of the so-called deposit facility to their customers. Last Thursday, the Governing Council of the ECB decided to raise the key euro area interest rates by 0.25 percentage points at its next meeting on 21 July. In September it is therefore possible “a larger step in the interest rate”.

Possible waiver in the fall

“If the deposit rate is brought to zero or positive in a second step, we will no longer charge a custodian fee in the retail banking sector,” the Deutsche Bank spokesperson said. With the ECB’s second rate hike scheduled for September, Deutsche Bank and Postbank could “probably completely forgo the collection of custodian fees for their private clients in October”.

Since mid-May 2020, Deutsche Bank has been charging so-called custody fees in its business with private clients. Currently, customers have to pay negative interest of € 50,000 on checking and investment accounts and € 25,000 for overnight money. It’s the same with Postbank, which belongs to the Deutsche Bank group.

Commerzbank wants to react quickly

Commerzbank does not yet specify when it will reduce custody fees for clients with large deposits. The bank is awaiting forthcoming ECB decisions, a spokesperson said on request today. Commerzbank chief Manfred Knof said in mid-May: “If the ECB reacts, then we can and will react quickly.” Direct bank ING Germany had already pledged on 10 May to abolish negative interest rates for almost all of its private customers by 1 July.

So far, there are still hundreds of lenders who are passing on negative ECB interest rates to their customers. According to the comparison portal Verivox, at least 451 of the approximately 1,300 credit institutions assessed in Germany are currently asking for negative interest rates from private customers (as of June 8). The Biallo Internet portal even has 582 banks and savings banks that collect negative interest from private customers (as of 9 June).

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