Swiss banks have been forced to fork out CHF8 billion ($8.3 billion) in negative interest fees since the Swiss National Bank (SNB) imposed its policy in 2015. Last year saw the heftiest annual bill of CHF2 billion, according to research from German company Deposit Solutions.
This content was published on
3 minutes
I write about the rapidly evolving artificial intelligence technology and its possible impacts on society.
Originally from England, I spent some time at the BBC in London before moving to Switzerland to join SWI swissinfo.ch.
The SNB currently sets interest rates at -0.75% to deter investors from flocking to the franc, which would cause the currency to climb steeply in value. The worry is that this would result in deflation of consumer prices, make Swiss exports less competitive and damage the domestic tourism industry.
Switzerland is not the only country affected by negative interest rates. The European Central Bank (ECB) has progressively reduced interest to -0.5%, hitting EU banks to the tune of €25 billion (CHF27 billion) since 2014.
German banks have faced the largest central bank bill – an accumulated €8 billion (CHF8.6 billion) – followed by their Swiss and French counterparts, says Deposit SolutionsExternal link.
Negative interest is hitting the profits of Swiss banks noticeably harder than their European counterparts, according to the study. The charges amount to 13.1% of Swiss banking pre-tax profits, compared to a Eurozone average of 5.6%, according to these calculations.
How it works
High street banks park client deposits at their respective central banks in the form of “sight deposits”. Regulations force banks to hold so-called “minimum reserves”, a percentage of customer money set aside to ensure that withdrawal demands can be honoured.
In times of economic stress, people tend to save more and turn to the safe haven franc in order to protect the value of their assets. This results in sight deposits swelling to higher amounts.
The SNB charges negative interest when these accumulated funds pass a certain threshold. This used to be 20 times the value of a bank’s minimum reserves, but the SNB raised the bar to 25x in November. This has provided some relief by exempting a greater proportion of sight deposits from negative interest charges.
The SBA believes this move will shave the bill down to around CHF1 billion this year.
But the central bank has also warned that its negative interest rate policy could stick around for some time to come, and could even go lower.
Train vs plane: would you take a direct train between London and Geneva?
Eurostar is planning to run direct trains from Britain to Germany and Switzerland from the early 2030s. Would you favour the train over the plane? If not, why not?
Man charged with flying drone at women’s Euro 2025
This content was published on
A man flew a drone around the venue on Wednesday evening during the first match of the Women's EURO 2025 in St. Gallen. The 30-year-old violated the absolute ban on flying during match days. He was reported to the police.
More than 250 Swiss companies sign CO2 reduction initiative
This content was published on
A total of 257 companies from Switzerland have signed up to the Science Based Targets Initiative (SBTi). In doing so, they are committing to CO2 reduction targets that are compatible with the Paris Climate Agreement.
Swiss accident prevention group sees federal targets at risk
This content was published on
The Swiss government's target for accident figures is at risk, reckons Mario Cavegn, member of the executive board of the Swiss Council for Accident Prevention.
Feminicide: Swiss justice minister calls for electronic monitoring
This content was published on
Swiss Justice Minister Beat Jans has called for electronic monitoring and an ankle bracelet warning system for perpetrators of violence against women.
This content was published on
American artist Chaka Khan ‘and friends’ opened the 59th Montreux Jazz Festival on Friday. For over three hours, their show, dedicated to their friend and mentor Quincy Jones, thrilled the audience,
If you want to start a conversation about a topic raised in this article or want to report factual errors, email us at english@swissinfo.ch.
Read more
More
Negative interest rates ‘harm Swiss economy’
This content was published on
Switzerland’s largest bank, UBS, asked 2,500 companies about the impact of negative interest rates. “Nearly two-thirds of respondents said that the cost…for the economy outweighed their benefits overall,” UBS said in a press releaseExternal link on Thursday. The findings heap more pressure on the Swiss National Bank (SNB), which continues to defend its actions. However,…
Bank savers feel sting from negative interest rates
This content was published on
The number of Swiss bank customers being charged negative interest rates on their deposits is on the rise – and shows no sign of reversing.
Bank lobby group demands end to negative interest rates
This content was published on
SBAExternal link Chairman Herbert Scheidt said on Thursday that a normalisation of interest rates “appears a long way off”. “Unfortunately, the societal, structural and long-term damages will become even greater the longer we find ourselves in this ‘lower forever’ environment,” he told the media. Banks are suffering from having to pay for the privilege of…
You can find an overview of ongoing debates with our journalists here . Please join us!
If you want to start a conversation about a topic raised in this article or want to report factual errors, email us at english@swissinfo.ch.