Wednesday, June 3, 2020

Data from a comparison portal: Further money houses burden savers with negative interest rates

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The trend towards negative interest rates on the overnight deposit account has accelerated in the Corona crisis, according to the Verivox comparison portal. According to data from the portal, 80 financial institutions have currently published negative interest rates in their price notices (cut-off date April 8).

Of these, 23 institutes introduced negative interest rates from March 9. These initially apply to new customers. So far, however, the clear majority of the institutes have spared their private customers.

“In the corona crisis, the trend towards negative interest rates accelerated noticeably,” said Oliver Maier, managing director of Verivox Finanzvergleich GmbH. Since some institutions make individual agreements with wealthy customers, a total of more than 80 financial institutions are likely to charge negative interest rates, explained Maier.

In addition, there would be 7 financial houses, where the usually free overnight account costs fees. This would actually result in negative interest rates. The comparison portal evaluated the price notices published on the Internet by around 800 banks and savings banks. The focus is on overnight accounts. According to data from the Deutsche Bundesbank, there were 1,717 credit institutions in Germany last year.

For a long time, negative interest was primarily levied on very high balances from EUR 100,000 and more. Meanwhile, according to Verivox, savers with lower investment amounts are also affected in some cases. According to this, at least 15 banks grant significantly less than 100,000 euros in allowances – three of them even charge the negative interest from the first euro.

According to consumer advocates, negative interest is only permitted for existing and new customers if the custody fee has been explicitly agreed with the customer. It is not enough to just change the general terms and conditions.

Money houses currently have to pay 0.5 percent interest when parking money at the European Central Bank (ECB). Even if there are now higher allowances, the industry is complaining about billions. Banks and savings banks have been passing the costs on to corporate customers for some time.

Bank President Hans-Walter Peters recently called on the ECB to end the burden on banks with negative interest rates. “In view of the economic situation in Europe, there is an urgent need to suspend negative interest rates immediately,” said the President of the Federal Association of German Banks (BdB) to the “Handelsblatt”. This would allow banks to strengthen their equity and make lending easier, Peters argued.

Since the introduction of negative interest rates almost six years ago, the ECB has withdrawn around 26.5 billion euros from European banks, Peters said. “This is money that banks are lacking today to provide their customers with loans.”

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