Credit Suisse scraps negative rates for Swiss private clients

The brand of Swiss financial institution Credit score Suisse is seen at a department workplace in Zurich, Switzerland, November 3, 2021. REUTERS/Arnd WIegmann

ZURICH, June 29 (Reuters) – Credit score Suisse (CSGN.S) is scrapping the adverse rates of interest it has charged rich Swiss purchasers since 2020, the lender stated on Wednesday, as its economists anticipate an extra fee hike in Switzerland this yr.

“Regardless of the continued adverse interest-rate surroundings, Credit score Suisse will repeal the account steadiness price and thus transfer away from utilizing adverse rates of interest in Swiss francs as of July 1 for the non-public consumer enterprise,” the financial institution stated in a press release.

In its first fee hike in 15 years, the Swiss Nationwide Financial institution (SNB) in June raised its coverage rate of interest to -0.25% from the -0.75% stage it has deployed since 2015. learn extra

Governing board members have signalled additional hikes might comply with, spelling a possible finish to the adverse rates of interest business banks have needed to fork out to carry cash on the SNB for the previous seven years.

“The economists at Credit score Suisse anticipate that the prime fee in Switzerland shall be raised additional over the course of the yr,” Credit score Suisse stated.

The transfer locations Credit score Suisse forward of bigger rival UBS (UBSG.S) in scrapping adverse charges for purchasers. A number of smaller banks, together with Valiant, Vontobel (VONN.S) and regional lender Aargau Kantonalbank, have already achieved so.

Business banks have come beneath strain for the reason that Swiss Nationwide Financial institution launched adverse charges in December 2014, quickly minimize additional to a file low of -0.75%. That coverage price business banks 1.2 billion Swiss francs in 2015 to carry deposits above a sure threshold with the central financial institution.

Banks have been at first reticent to go these expenses on to personal prospects, saying such a transfer may “trigger a bank run“, however over time they started offloading extra of those prices.

UBS in July 2019 announced it could start imposing a 0.75% price on rich purchasers with deposits above 2 million Swiss francs that November, a transfer quickly followed by Credit score Suisse.

UBS additional lowered that threshold to 250,000 Swiss francs in 2021, as then-Swiss banking head Axel Lehmann — now the chairman of Credit score Suisse — spoke of contending with adverse rates of interest “for years to come“.

Nevertheless, financial coverage circumstances have shortly shifted in 2022 as central banks look to struggle resurgent inflation, resulting in a spate of fee rises in June. learn extra

Reporting by Brenna Hughes Neghaiwi and John Revill; Enhancing by Riham Alkousaa and Michael Shields

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