The largest German financial institution will in future charge negative interest for deposits from 100,000 euros. However, this only applies to newly concluded contracts. This is Deutsche Bank’s response to the ECB’s low interest rate policy.
Deutsche Bank introduces negative interest rates for large deposits by private customers. “The ongoing pressure from negative interest rates makes it necessary for Deutsche Bank to charge custody fees for new contracts for high deposits beyond an allowance of EUR 100,000 per account from May 18, 2020,” said a company spokesman in Frankfurt on Wednesday. This means that wealthy customers will have to pay a levy to the bank in the future instead of getting interest on their money in the account.
However, the new regulation applies “exclusively to new contracts” in private customer business at Deutsche Bank and Postbank. Accordingly, current and overnight accounts are affected by the measure.
ECB has kept interest rates low for years
Existing account contracts and deposits below the limit of EUR 100,000 were spared. “In the broad customer business with relatively low deposits, Deutsche Bank does not pass on custody fees for deposits to customers,” said the spokesman. The “Handelsblatt” had previously reported.
Until now, Deutsche Bank had only charged large corporate clients and very wealthy private clients negative interest on large deposits. With this move, the money house is reacting to the low interest rate policy of the European Central Bank (ECB), which the central bank has been operating for years. If banks park funds with the ECB, they have to pay penalty interest – that costs the industry billions.
As a result, more and more banks are introducing negative interest rates for private customers, sometimes even with allowances lower than EUR 100,000. Many banks have been passing the costs on to corporate customers for some time.