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Comdirect still wants to avoid negative rates in wider retail deposit book

Comdirect bank AG, the digital arm of German lender Commerzbank AG, still aims to avoid charging negative rates in its wider retail deposit portfolio, a spokesperson told S&P Global Market Intelligence on Dec. 5.

The statement was in response to media reports saying the bank has started charging negative rates of 0.5% on retail customer deposits above €250,000 from Dec. 1. German media outlets quoted estimates by price comparison website biallo.de reported by Bloomberg.

The spokesperson confirmed the initiation of charges but said Comdirect is talking to individual clients and is imposing negative rates only on a select number of retail customer deposits. While the thresholds has been set at €250,000, the few clients the bank has approached so far hold far higher deposit amounts, the spokesperson said.

Many German banks have started charging negative rates in their retail portfolios after the ECB set its interest rate on banks' excess cash holdings at negative 0.5% Sept. 12 from negative 0.4% previously. The low interest rate environment is eroding German banks' profits given their high reliance on net interest income. The ECB deposit rate cut is also boosting their annual costs.