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HSBC to charge for holding deposits

OWoN: So now they want to charge you for storing and saving your money? Money which they lend out for a fat profit, isn't this called Double Dipping? Once they get their grubby hands into your account, they will milk it dry.

This is understandable on one hand and a great danger on the other. Socialism steadily imposing itself into banking. Banking does not yet realize that failed social government experiences like the EU will stop at nothing to hang on. 

What's next, nationalization of banks by failed states to execute policies to keep politicians in power? Will failed policies dictate private decision making in all aspects of financial life? Every time in history such attempts have been made the world has seen ruin and revolution to follow. It seems Europe cannot learn from its own history, where empires like Rome tried this and failed miserably.

HSBC to charge for holding deposits

HSBC has become one of the biggest global banks to say it will begin charging clients on deposits in a basket of European currencies.

Financial Times
By Martin Arnold
and Richard Milne
19 May 2015

The decision underlies the extraordinary measures banks are taking to prevent their profit margins being crushed in the record low-interest rate environment.

HSBC has written to other banks to warn it will start charging them for deposits in euros, Swiss francs, Danish krone and Swedish krona — all currencies of countries that have negative interest rates — at its UK, German and Hong Kong operations from this summer.

It is the first UK bank to announce such charges following similar announcements from Swiss, German and Nordic institutions.

HSBC charges banks for deposits they hold with us in currencies where negative interest rates apply,” the UK-based lender said in a statement on Tuesday. “Banks affected have been notified and we continue to monitor the situation.”

The unusual steps come after the European Central Bank became the first big central bank to announce a negative deposit rate — in effect a penalty on banks parking their surplus cash — last year.

Central banks in Sweden, Denmark and Switzerland have also imposed negative policy rates of between minus 0.25 per cent and minus 0.75 per cent as they battle deflation and currency pressures.

HSBC wrote to the banks that will be affected this week and will introduce the negative interest rates on August 1. It will not affect the deposits of individual or corporate customers.

German, Swiss, Danish and Swedish banks have been at pains to avoid subjecting the general public or small businesses to fees for depositing cash, preferring to impose levies only on the biggest corporate and institutional customers.

UBS introduced negative interest rates for interbank accounts in 2012 for balances in Swiss francs and in euros, a person familiar with the situation said. Credit Suisse said in January that negative deposit rates had “long applied to the credit balances of financial institutions”.

More recently, in the wake of negative interest rates from the Swiss National Bank, both UBS and Credit Suisse have also applied negative interest rates to some corporate and other institutional accounts. But they have so far held back on introducing negative rates on regular retail accounts.

Only Erhvervsbank, a small Danish bank, and Skatbank, a regional German lender, have bitten the bullet and announced plans to make retail customers pay to hold money in deposit accounts.

Analysts expect Sweden’s Riksbank to cut its interest rates further into negative territory in the coming weeks. But pressure on the Danish central bank, fighting to maintain the krone’s peg to the euro, has eased in recent weeks to the extent that some traders speculated that it could raise its deposit rate from its record low.

Negative deposit rates at central banks are not the only reason that banks have been trying recently to dissuade clients from depositing money with them. Regulation has also made big deposits from institutional clients more expensive for banks to hold.

JPMorgan Chase said this year it would start charging some of its biggest institutional customers, such as hedge funds and foreign banks, to make “excess” deposits, which have become too costly under new liquidity rules.

Additional reporting by James Shotter in Frankfurt and Laura Noonan in London.


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