Banks Begin Charging for Euro Deposits After ECB Imposes Fees

Oct. 17 (Bloomberg) — Banks are starting to charge their customers for depositing large amounts of euros, passing on fees imposed by the European Central Bank, rather than paying interest.

Bank of New York Mellon Corp., which holds money for institutional investors, began charging for euro deposits on Oct. 1, Chief Financial Officer Todd Gibbons said today on a conference call. Goldman Sachs Group Inc. also is among firms with fees, and Credit Suisse Group AG has told clients it’ll pass along so-called negative interest rates, people with knowledge of their decisions said.

The reversal from paying interest to charging it comes after the ECB started charging 20 basis points, or two-tenths of a percentage point, in fees for funds parked at the bank. Brian Shea, BNY Mellon’s co-vice chairman, said clients have reduced their euro deposits a bit since the imposition of the charge.

“What we’re doing is essentially passing through the 20- basis-point fee that we’re absorbing from the European Central Bank,” Shea said. “We’re seeing everybody else do it.”

JPMorgan Chase & Co. is imposing fees as well, the Wall Street Journal reported earlier today, citing unidentified people familiar with the matter. A spokeswoman for the bank declined to comment.

Interest rates have fallen below zero before. Two years ago, some custody banks charged depositors to hold Danish kroner and Swiss francs as customers fled from the euro. U.S. Treasury securities traded at negative yields during parts of the 1930s and 1940s, and Switzerland imposed negative interest rates in the 1970s as part of capital controls.

To contact the reporter on this story: Zeke Faux in New York at [e-mail] To contact the editors responsible for this story: Peter Eichenbaum at [e-mail] David Scheer, Steven Crabill