Monday 16 September 2019

Danish bank Jyske to charge wealthy savers on deposits

Jyske Bank branch in Copenhagen
Jyske Bank branch in Copenhagen

Frances Schwartzkopff

Denmark’s Jyske Bank, which this month made history by offering 10-year loans with a rate of minus 0.5pc, plans to levy negative rates on deposits held by its richest clients, starting in December.

CEO Anders Dam said after seven years of negative rates in Denmark, something had to give. “We had always thought that negative rates were a temporary thing,” he said.

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“It now appears that they’ll be more permanent. The expectation is that there could be negative rates for the coming eight years.”

Jyske depositors will have to pay for any amount above 7.5m kroner (€1m), the bank said yesterday. The policy was announced with second-quarter results that showed net interest income fell 7pc from a year earlier.

Mr Dam said interest on the portion of a deposit exceeding Jyske’s threshold could be negotiated with the bank, but if there was no agreement, it would be set at minus 0.6pc.

Banks in Denmark have had to deal with negative rates for longer than their European competitors. The nation’s central bank cut its benchmark rate below zero in mid-2012.

UBS and Credit Suisse have taken similar steps with their wealthiest depositors.

Danske Bank is holding out. Denmark’s biggest bank guaranteed clients that it will not follow suit. Other Nordic banks have balked at the idea of charging retail depositors. At Swedbank, Sweden’s biggest mortgage lender, spokeswoman Unni Jerndal said there were no plans to introduce negative rates for private clients.

Until now, banks have resisted sharing the pain of plunging rates with retail customers. That may be changing, after the Danish Bankers Association said seven years of negative rates are hurting the industry. The association said the central bank ought to look into expanding a facility that allows banks to park excess cash at a 0pc rate.

Ulrik Nodgaard, the association’s head, said Jyske’s decision to charge its wealthiest savers should not come as a surprise, but such measures alone would not relieve pressure on the industry.


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