Swiss banking giant Credit Suisse (CS) announced today that it would begin charging its wealthiest clients with big deposits. The move is designed to pass the effect of negative interest rates on the customers.
All wealthy clients will be affected
According to the bank, all of its wealthy customers who receive large deposits in Swiss francs denomination will now be charged extra. Any individual or business client who holds over 2 million Swiss francs in their accounts will now pay -0.75% on their deposits. Those with balances lower than this amount of balances in a different currency will not be affected by the change. The bank’s business clients who hold balances of over 10 million francs will be charges -0.85%.
The rules are harsher on corporate customers, who have been given a shorter time frame to maneuver. The new rates will be imposed on their balances on November 15 while individual customers will have to pay interest from January 1, 2020 onwards.
Swiss banks want your money
It is not just Credit Suisse that is trying to charge its customers for their deposits. Its arch-rival UBS announced a similar rate of interest on customer deposits in July. UBS said that it would start charging a hefty rate of -0.75% on all accounts with deposits of over 2 million francs. Postfinance is charge fees from individuals with balances of over 500,000 francs. The situation is dire for wealthier customers all over Switzerland where negative interest rates have become common.
Julius Baer, a private bank located in Switzerland also follows a similar strategy of making its wealthier customers shoulder the negative interest rates. However, these rules have mostly been applied to corporate accounts only, and individual account holders have mostly remained safe. Now, with Credit Suisse going after individual customers also, the situation is about to change drastically.
In a Friday statement, the bank said,
“As other banks have been doing for some time, Credit Suisse is introducing negative interest rates for clients with very high Swiss franc cash holdings. The reason for this is the persistent negative interest rate environment.”
It is important to note that the Swiss National Bank (SNB) has been charging a negative interest rate from commercial banks since January 2015. It charges -0.75%. The rule was imposed on all commercial banks almost overnight to reduce investors’ interest in Swiss francs as a safe haven. The central bank is expected to lower the interest rates next year.