As of June 1, Switzerland's largest bank will stop paying interest on adult savings accounts.
Funds deposited in UBS savings accounts currently earn a rate of 0.01%, just like at Credit Suisse, the other major Swiss bank. Almost all other Swiss banks pay a small interest on saving accounts with the average amounting to 0.07%.
"UBS assumes that this phase of very low interest rates will continue for some time to come. For this reason, the bank decided to adjust its interest rates," the bank told the Swiss news agency.
Online comparison platform Moneyland warns that the move by UBS could have a ripple effect. UBS already doesn’t pay interest on saving accounts with more than CHF500,000 ($495,000). According to Moneyland there is a possibility that the bank could even impose a negative interest rate on such accounts in the future. For comparison, competitor Credit Suisse applies zero interest rate to savings over CHF250,000.
It is not just adult savings account that will suffer from the new UBS policy. Interest rates of youth savings accounts, retirement accounts (third pillar) and vested benefits pension accounts (second pillar) will also take a hit, dropping from 0.50% to 0.25%, 0.20% to 0.15%, and 0.05% to 0.01% respectively.