Credit Suisse has joined the likes of UBS and Post Finance in charging rich clients to park their wealth in its vaults. It will pass on the cost of the central bank’s negative interest rates to both private individuals and corporate accounts above certain thresholds.
From November 15, corporate clients will be charged -0.85% interest on cash holdings above CHF10 million ($10 million), Credit Suisse confirmed on Friday. Individuals will face -0.75% rates on savings accounts above CHF2 million, starting from January 1, 2020.
“In line with the approach that has long been followed by other banks, Credit Suisse is now also introducing negative interest rates for clients with very large CHF cash holdings. The reason for this is the persistent negative interest rate environment,” the bank stated.
This has come about because the Swiss National Bank (SNB) charges negative interest rates on money it holds on behalf of commercial banks. The Swiss Bankers Association says this costs commercial banks CHF2 billion a year.
The SNB argues that it is necessary to charge negative interest to prevent the Swiss franc from increasing in value against other currencies. Despite complaints from the financial industry, this policy looks set to stay in place for the immediate future.
Earlier this year, UBS introduced similar charges for its wealthiest clients, a strategy that Post Finance had already put into place.
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