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There is no going back, several banks are studying charging for deposits

2021-01-18T14:11:07.722Z


If they apply the reasoning of charging the individual to low interest rates, they must also pay the client for negative mortgages


Now it seems there is no excuse.

The collection of savings is becoming more widespread.

First they began to charge institutional clients and large corporations, then companies and now the collection of deposits from retail clients has begun, those to whom the bank insisted that it was not going to charge, that it was anti-popular and it could further worsen the image and reputation of the bank.

But the pandemic arrived and Spanish savings were boosted while interest rates fell to sub-zero levels never seen before, such as temperatures in Madrid.

The first to report it in Spain (apart from foreign private and corporate banks) was ING.

The Spanish subsidiary of the Dutch bank gave another turn of the screw to commissions in November and will charge 10 euros to clients without direct debit their payroll who have more than 30,000 euros in their account as of April.

It was, as we explained on November 16, the first to apply this commission with which it intends to compensate for the penalty imposed by the ECB on banks for having their money deposited in the institution chaired by Christine Lagarde, rather than for providing a service .

But it was clear that this new commission was not going to be limited to ING.

BBVA has also signed up to this trend to charge 0.025% per month to the balances of less-connected clients from 100,000 euros in the account, when this is higher than 200,000 euros.

That is, 0.3% per year.

Santander charges 0.4% from institutional private banking clients.

But, as recognized by several banks, this trend will not be limited to these entities.

It will spread.

In fact, almost all banking institutions study this initiative, although not all will dare to apply it to their customers, but some other banking group has already commented that they do not rule out applying a rate to customers with balances above 100,000 euros ( those that the Deposit Guarantee Fund guarantees in the event of bankruptcy of a financial institution).

The change is so radical that even AEB has addressed this issue in recent days.

It justifies this change in banking tactics, and therefore in message, in that the increase in deposits observed in recent months responds to the search for security and confidence of families, a trend that is also observed in European level.

AEB argues that the decision to collect


savings from the retail customer depends on the strategy of


each entity

The return on deposits is zero, but it must be compared with the negative interest rates on other assets such as treasury bills and negative official interest rates.

Therefore, the decision to charge for deposits depends on the commercial strategy of each entity in a context of high competition such as the Spanish banking system.

The discourse that private customers will not be charged has been struck down.

This strategy, which in a few months will be extended to other banks, counts, let's not forget, with the support of the Bank of Spain.

The governor of the Bank of Spain, Pablo Hernández de Cos, is in favor of banks charging customers for their deposits in the face of negative interest rates.

"The banking sector was initially reluctant to apply negative deposits, but the entities have been encouraged because it allows them to minimize the effect that this policy has on the interest margin," he declared last November.

And he added that the percentage of clients subjected to negative rates at European level follows a clearly increasing trend.

"If rates remain negative, it is likely that this practice will continue to spread progressively," he added.

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Well, nothing, you will have to get used to these commissions, which are added to the already dozens of fees that apply for operating in the entity.

Even if you are a linked client, you have commissions, although in these cases flat rates begin to apply.

But if they consider that they should pass on to clients the cost they suffer for having their assets in the ECB, they should also do the exercise in reverse, that is, in mortgages.

If it is against nature to pay to lend, it is also against nature for a customer to pay to save.

In this way, mortgages with negative interest rates, a case that is also currently occurring with a Euribor of -0.5%, should be remunerated if the same argument is applied as for the collection of deposits.

Banks, thus, should pay their clients for mortgages that show negative interest rates after adding the differential, unless there are any legal restrictions, according to this newspaper on October 14.

That is the conclusion that José Manuel Campa, president of the European Banking Authority (EBA), explained in an intervention in the European Parliament.

These differences, even if they were not paid, could be compensated with deposits or reducing commissions to the client, why not?

It would not be strange that now the complaints of consumer associations put their focus on this dichotomy.

If you charge me for the deposits, you pay me for the credits.

The world seems upside down, but that's the way we are.

And meanwhile, neobanks and fintech are beginning to take off and become a real threat to traditional banking.

The pandemic, with the confinement in the homes of citizens, together with the dissemination by this online bank of messages of lower and more transparent commissions, is penetrating the population at a higher rate than expected just a year ago.

By the way, the Danish mortgage market has made headlines recently.

Nordea Bank has launched a 20-year 0% fixed rate home loan.

It seems that in Spain it is very difficult for any entity to dare to imitate the Danish bank.

It is another matter if there were a true single European banking market.

From HelpMyCash.com they consider that "it is unlikely that Spanish banks will launch mortgages at 0%, as it would mean giving up one of their main sources of income".

Also, the Danish mortgage market works very differently from Spanish, but who knows.

The competition is getting tougher.

Source: elparis

All news articles on 2021-01-18

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