As the Swiss National Bank loosens its policy and raises its benchmark, a battle for deposits has emerged in Swiss retail banking. finews.com surveyed institutions that began luring deposits with higher savings interest rates early.

Markus Schwab went out on a limb last summer. Shortly after the Swiss National Bank (SNB) raised key interest rates for the first time in 14 years in June, the banking app Yuh which he runs, rushed to market with savings interest rates of up to 0.5 percent. He hopes to attract up to 200,000 new customers, he told finews.com, saying «a run would be a great thing, of course!» at the time.

The hoped-for run had plenty of time to materialize since then. The gap between Yuh and other institutions offering higher savings interest rates early on and the broad field of competitors remains large.

UBS Takes its Time

Others are taking their time. UBS is waiting until February to introduce 0.1 percent interest on savings accounts for adults for the first time. Credit Suisse announced an increase in the current prime rate to 0.25 percent on the same date up to a limit of 500,000 francs. The three other major Swiss banks, Zuercher Kantonalbank, Postfinance, and Raiffeisen, currently pay prime rates of 0.5 percent, 0.4 percent, and 0.25 percent for Raiffeisen cooperative members.

According to the Moneyland comparison service, the average Swiss savings interest rate is 0.2 percent, with an applicable SNB prime rate of 1 percent. A few cantonal and smaller regional banks have since jumped ahead with significantly higher savings interest rates, including Zuger Kantonalbank with 0.65 percent, Luzerner Kantonalbank with 0.6 percent, while Credit Suisse offers 1 percent through a specific offer on its CSX banking app.

Rejoice The Banking App

But have those offering higher rates early on succeeded in luring customers away from their less generous competitors?

Yuh said in response to a request from finews.com that offering higher rates visibly contributed to increasing the number of users to 100,000 recently from 75,000 customers last summer. Zuger Kantonalbank also benefitted. «With the increased interest rates, we are sensing a renewed interest among customers to increase the volume of savings and also a greater willingness to open new accounts,» it said.

Increased Customer Volume

With the special conditions it offers via its CSX app, Credit Suisse has generated «pull». Along with an attractive interest rate, the comparatively high deposit limit is very well received. Bank WIR, which reacted particularly quickly to the SNB's policy changes, is also pleased with the effect. «We can actually speak of an increased customer volume in savings and pensions, which of course pleases us,» the bank told finews.com.

Despite offers, however, there still has not been a tidal wave of savers switching to the more generous financial institutions. Observers warned that Swiss banks underestimated the mobility of savings and could be forced to pay savers a higher interest rate within weeks instead of months with consequences for interest margins. Those not participating in the battle for deposits could even have problems with refinancing.

Above 0.5 Percent

Still, UBS can afford to take its time with a return to offering savings interest rates until February. Moneyland CEO Benjamin Manz recently explained the hesitant attitude of the larger banks by the fact they are less dependent on new customers and can offer less favorable conditions. In principle, banks are expected to follow the SNB's rate increases, he says. «It's quite possible that savings interest rates for adults will rise to more than 0.5 percent on average this year.»

Raiffeisen Switzerland, the headquarters of over 200 affiliated banks in the country, is taking things in stride. The Raiffeisen Group doesn't want to make further increases in savings interest rates dependent on the SNB's interest rate policy, according to a spokesperson. Current savings interest rates serve as recommendations to the banks in the group.

Making Savings Worthwhile

Luzerner Kantonalbank, which offers comparatively attractive savings interest rates, sees the need to make customers aware of saving again after years of zero interest rates. «Because customers have become accustomed to zero and negative interest rates in recent years, the bank plans to advertise interest rates, which are positive again,» says a spokesperson.

This indicates Swiss banks will navigate the interest rate environment without much turbulence. Despite intense competition, they can afford to increase mortgage rates, and ten-year fixed mortgages have climbed more sharply in 2022 than at any time in the past ten years. Banks are now also raising the conditions for consumer loans.

Positive Sentiment

While interest rates are climbing rapidly on the asset side and earnings are gushing into the banks, solidly financed financial institutions can wait to pass on the higher interest rates to savers, at least on new business. According to a recent survey of Swiss regional and cantonal banks by EY, the institutions are very positive about their interest business, even in the longer term.

All cantonal banks and 92 percent of regional banks expect operating results to rise in the long term. According to the survey, largely due to the turnaround in interest rates. «The prospect of higher interest rates is leading to very great optimism,» the study notes.

Additional reporting by: York Runne