Swiss banks are a lot less timid about passing on surcharges on franc deposits to the smallest of their clients, according to a study.
Small clients of Swiss banks have until now been spared the brunt of charges – 0.75 percent – on their franc deposits, a result of a six-year-long policy of negative interest rates by the Swiss National Bank. Swiss lenders have levied the charges on wealthy clients in their private banks, but not in their sizable domestic retail arms.
«Charging negative interest on customer balances is therefore no longer taboo, especially for customers who do not use any other revenue-generating services for the bank apart from plain account management,» according to an annual barometer compiled by big-four consulting firm EY. The SNB levies the surcharges to dissuade haven flows into the franc.
Massive Shift in Views
In doing so, the central bank has made life tough for banks and also pension funds, which are forced to take bigger risks to generate returns and ensure payouts. Normalizing monetary policy – or returning to positive benchmark rates – is some ways off, especially amid the pandemic-induced crisis.
Just 11 percent of banks in Switzerland «categorically rule out passing on negative interest rates to private customers,» from 21 percent at the same time last year – and from an overwhelming majority of 70 percent five years ago, EY said.
It noted that no segment of Switzerland's multi-faceted banking system is immune: a mere 14 percent of regional banks and six percent of cantonal lenders categorically rule out passing on franc charges to retail clients.
