UBS will introduce fees on big euro deposits held by private clients at the Swiss bank, two sources familiar with the matter told finews.asia. The move is in response to negative interest rates levied by the European Central Bank on cash deposits.
The dam has broken for UBS: the Zurich-based UBS will begin charging individuals for holding euros, two sources familiar with the matter told finews.asia on Tuesday.
Ultra-low interest rates in the euro-zone and elsewhere as well as wealthy clients holding a large portion of their assets in cash – as opposed to investing – has led the bank to pass on negative interest rates in an attempt to dissuade clients from holding cash.
Big Euro Accounts
Clients based outside of Switzerland will pay 0.6 percent on euro-denominated accounts of more than 1 million euros beginning May 1, the people said. UBS confirmed that it will charge European private clients to hold «large» euro cash balances, but didn't elaborate.
«We are striving to find solutions and are working closely with all affected clients to avoid incurring such deposit fees,» a spokesman told finews.asia in a written statement. Like most Swiss banks, UBS is taking a hit to earnings because it pays central banks – including Switzerland's – for depositing cash.
Charges for Individuals
The pain is worsened by private clients, nervous over an uncertain economic and geopolitical outlook, hoarding huge cash piles instead of investing their money.
The ECB’s negative deposit rate, introduced more than two years ago, was meant to juice spending and investment in sluggish euro-zone economy. It has led, for example in Germany, to retail savers being charged to hold euros.
Letters to Clients
UBS sent letters to clients earlier this month detailing the changes, which represent the first time the bank has levied them against individuals. Until now, the bank has aimed such charges at institutional investors only. UBS has made it clear that it is keen to avoid charging savers in Switzerland to hold Swiss francs.
