German banks are opposing a proposed ban on charging retail clients additional fees to cover costs arising from negative deposit rates at the ECB, the Financial Times reported.
German Finance Minister Olaf Scholz previously said that the legal implications of a ban on charging "penalty interest" on retail deposits would be examined by officials, drawing criticism from the Federal Association of German Banks, which claimed that legal interference on the banking system would "not help the customer any further" and "lead to dangerous instability on the financial markets," according to the Aug. 26 report.
The banking body, which represents more than 1,500 companies, added that credit institutions autonomously base their prices and fees on the market environment.
It comes after Bavarian Minister-President Markus Söder proposed the ban amid concerns that more fees would be charged against the public if the ECB were to further reduce its rates in September.
The ECB's deposit rate currently stands at negative 0.4%, billing German banks roughly €2.4 billion annually, the FT noted. German banks would take the biggest hit in case the ECB further cuts rates since they hold roughly a third of total excess deposits on which the regulator imposes negative rates, the report added.
Although some lenders charge the costs on to companies that have hold accounts with them, some banks, like Hamburger Sparkasse AG, have already imposed "custody fees" on private and corporate clients. The bank, however, told the newspaper that it is still avoiding charging retail clients.
Some foreign banks have also signaled that they would charge clients additional fees in case of negative interest rates. Denmark's Jyske Bank A/S will charge negative interest rates on customer balances above 7.5 million kroner beginning Dec. 1, while three big Swiss lenders — UBS Group AG, Credit Suisse Group AG and Julius Bär Gruppe AG — will expand or introduce new charges on certain euro deposits.
As of Aug. 23, US$1 was equivalent to 6.69 Danish kroner.
