Despite years of negative interest rates in European countries, German bankers, who had to pay more money to the central bank after people deposited large amounts of money in German banks during the Newcastle pneumonia (CCP) outbreak, are charging depositors a safekeeping fee after all.
The Wall Street Journal reports that Germany‘s biggest banks, including Deutsche Bank and Commerzbank, have been telling new customers since last year that they will be charged an annual 0.5 percent custodial fee if they deposit large sums of money in their banks.
These banks said they can no longer afford the deposit reserves charged to them by the European Central Bank (ECB) in a negative interest rate environment. The more customers deposit with the banks, the more money the bankers have to put into the ECB.
When the ECB first implemented negative interest rates in 2014, most bankers across Europe refused to pass on the cost of negative interest rates to customers because they feared a backlash from the public. Some banks only charge corporate depositors because businesses are less likely to complain to local politicians. Many banks have used other methods, such as raising fees, to pass on the cost of negative interest rates.
However, the new crown Epidemic has changed this situation. As people who stayed Home to avoid the epidemic did not eat at restaurants or travel for vacation, the savings rate went up. Moreover, the ECB’s massive bailout plan has led to an influx of deposits into banks. Bankers are also doing what they haven’t done for a long Time, as the epidemic has reshuffled the economy.
According to Verivox, 237 banks in Germany are now charging negative interest rates to individual depositors. By contrast, only 57 banks did so before the outbreak in March last year. If the depositor’s deposit amount falls between 25,000 and 100,000 euros, the bank charges an annual interest rate of 0.4% to 0.6% for safekeeping fees.
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