A small co-operative bank in the picturesque town of Gmund in Bavaria is turning financial norms upside down. It has decided to charge clients a fee for depositing money with them.
It applies to deposits of more than 100,000 euros held in current accounts. Local media reports suggest fewer than 150 customers will be affected.
It is the latest sign of the strain that the European Central Bank’s monetary policy is putting on the country’s financial system
Josef Paul, who is a board member of Raiffeisenbank, insisted the new policy was a reasonable one.
He said: “The background is that funds in current accounts have to be available every day and we cannot use them to create investments. The ECB demands 0.4 percent negative interest from us, and now we are going to pass that on to our clients. It does not concern saving accounts or other types of investment, only current accounts and instant access savings accounts.”
He added: “It’s like a domino effect we are just passing on the costs that the ECB has placed on us.”
The ECB, which sets interest rates for the eurozone, cut benchmark interest rates deeper into negative territory in March.
Central banks in three other European countries — Switzerland, Sweden and Denmark — have also set negative rates.
It is supposed to encourage banks not to hold on to cash and to lend in order to stimulate Europe’s economy. But with banks finding it difficult to get customers spending, the policy is now hitting the customer rather than the bank.
German banks are considering a variety of strategies in response to the low interest rate environment. These range from introducing fees for services previously offered for free, such as paper account statements, to keeping cash in their own vaults rather than parking it with the ECB.