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The End of “Cold Expropriation”: Are Negative Interest Rates Falling?

2022-06-05T18:10:00.605Z


The End of “Cold Expropriation”: Are Negative Interest Rates Falling? Created: 06/05/2022, 20:00 By: Peter Borchers Stop it? Experts expect the central bank to change its interest rate policy. This could eliminate the custody fees that annoy investors. © Christian Ohde/dpa The controversial negative interest rates could fall as soon as the European Central Bank abolishes the negative deposit r


The End of “Cold Expropriation”: Are Negative Interest Rates Falling?

Created: 06/05/2022, 20:00

By: Peter Borchers

Stop it?

Experts expect the central bank to change its interest rate policy.

This could eliminate the custody fees that annoy investors.

© Christian Ohde/dpa

The controversial negative interest rates could fall as soon as the European Central Bank abolishes the negative deposit rate.

Local financial institutions are currently observing the actions of the central banks - and want to react quickly.

Bad Tölz-Wolfratshausen

– Financial experts expect that the European Central Bank (ECB) will change its interest rate policy in the coming months and abolish the negative deposit rate.

The so-called custody fees of banks and savings banks, popularly known as penalty interest, are linked to it.

At the beginning of 2021, more than 100 banks across Germany introduced the controversial deposit rate.

It is currently at minus 0.50 percent.

Should the ECB reduce it, the financial institutions want to follow suit.

Some banks in the north of the republic even anticipated the decision of the central bankers and increased their allowances.

The motto of the bankers in the district: observe the market, then act.

Commerzbank with a district branch in Bad Tölz will not pay in advance.

Sandra Kobus, the company's spokeswoman for the southern region, responded to our query briefly: "We are taking a close look at developments and will react if the rising interest rates prove to be sustainable."

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Since mid-May 2020, Deutsche Bank has been charging custody fees with its Postbank brand in the private customer business.

“The allowances for custody fees are 50,000 euros for current and investment accounts and 25,000 euros for call money accounts.

Savings accounts are exempt from a survey,” says spokesman Hartmut Schlegel.

Should the ECB change the interest rate, "we will adjust the fee in the retail customer business at short notice and in the event of a deposit facility of zero or more, we will waive the charging of a custody fee".

The Sparkasse Bad Tölz-Wolfratshausen also links the custody fee to the interest rate of the ECB.

As soon as this interest rate changes to at least 0.00 percent, an agreed custody fee is automatically canceled, says spokesman Willi Streicher - and emphasizes: "We have not introduced custody fees across the board, but have agreed them individually." A change will therefore "also take place individually".

As an alternative to daily deposits with negative interest, the Sparkasse offers positive interest rates for investments with a term of one year or more.

"Otherwise we will wait for the decision of the ECB."

Willi Streicher, spokesman for Sparkasse Bad Tölz-Wolfratshausen © Archive

Streicher can understand the anger of some customers: "It is understandable that nobody would like to pay a custody fee, especially with the current inflation rate." Only a small part of the investors is affected.

“Here we are and have always been talking about alternative forms of investment.

The banks and savings banks were the first to be affected by negative interest rates.

Only then were the negative interest rates passed on to customers.”

"We are currently experiencing a significant increase in yields on ten-year federal bonds, which are driving up the financing interest in particular," says Andreas Pentenrieder, spokesman for Raiffeisenbank Isar-Loisachtal eG (Rileg).

The effects of this rise in interest rates on the deposit side of the bank would have persuaded his bank "not to further reduce the allowances on credit balances, but to leave them at the current level of EUR 120,000 per person".

For long-term customer deposits such as time deposits with a term of four years or more, Rileg has “already introduced a significantly positive credit interest rate”.

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Andreas Pentenrieder, spokesman for the Raiffeisenbank Isar-Loisachtal eG © Archive

Pentenrieder and his colleagues are observing the forthcoming decisions of the central banks “very closely.

After the interest rate hikes by the US Federal Reserve and the continued fantasy of interest rate hikes, the ECB is slowly coming under pressure,” believes the spokesman.

Shortly after the ECB's interest rate step, his house will vote internally on how to deal with negative interest and tax exemptions.

"We can also imagine a complete waiver of this custody fee." Investors would be happy about that.

Pentenrieder believes that the fact that negative interest has annoyed customers is “understandable.

We would also prefer the classic world of interest rates with interest on savings deposits and appropriate financing rates.” However, the interest rate environment in recent years has put a heavy strain on the banking world.

Manfred Klaar, member of the board of Raiffeisenbank im Oberland eG © Archive

VR-Bank München Land is currently offering its customers a tax-free allowance of EUR 100,000.

In addition, it charges them 0.5 percent and thus, says Peter Wein, "currently only passes on the rate set by the ECB without calculating a margin".

If the market interest rate changes, for example due to changes in the ECB's deposit rate, "we will take this into account," promises the marketing manager.

Another cooperative bank operating in the district, Raiffeisenbank im Oberland eG, wants to pass on interest rate changes from the ECB “immediately and 1:1”.

This is announced by board member Manfred Klaar.

Since when the custody fees were introduced, his company "acted with an allowance of EUR 150,000 per person right from the start", "significantly fewer customers were affected here than at other institutions".

We have always criticized this cold expropriation of savers.

Manfred Klaar, Raiffeisenbank im Oberland eG

Klaar therefore considers a further extension of the allowances to be “not appropriate”.

The development on the capital markets has also created opportunities for financial investments "in which investments can be made again without price fluctuations for a certain period of time".

In the past, the calculation was individually agreed with each customer and was met with great understanding - "even if, of course, no one wants to pay these fees".

His company held back on the introduction for a long time, the business economist continued.

"Unfortunately, the first restriction on the calculation for new customers did not last long, since we also had painful cash inflows from long-term customer relationships." In this respect, it was necessary from an economic point of view to introduce custody fees.

The cooperative banks have made their general opinion on the negative interest rate policy of the ECB public over the years.

Klaar: "We have always criticized this cold expropriation of savers."

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You can read the latest news from Wolfratshausen, Geretsried and the surrounding area here

Source: merkur

All news articles on 2022-06-05

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