Interest rates: The European Central Bank requires banks to hold deposits in order to stimulate lending. Photo: Alex Kraus / Bloomberg
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Imposing negative interest rates on retail customers will be « a bridge too far » for banks here, said a bank analyst.
Comments come when banks increase the number of customers they charge to hold their funds , whereby large companies, pension funds, credit unions and wealthy private individuals are affected.
In December alone, almost 1 billion euros were displaced into bank and credit union savings accounts.
Thus, the sum reached a historic high of 125 at the end of last year Billion euros.
Last fall, AIB announced that it would impose negative interest rates on high net worth individuals with assets in excess of 1 million euros.
Goodbody Stockbrokers’ bank analyst Eamonn Hughes said the strong deposit growth in the The entire system with significant excess liquidity provides banks with cover for negative interest rate movements.
But he added: « We still believe that negative interest rates ze will go too far for mainstream retail customers, although we see banks being more willing to increase the cost of managing higher fee accounts with excess liquidity. «
He said, Bank of Ireland have expanded the range of customers it uses negative interest rates for, mainly corporate customers.
Mr Hughes said the bank had previously announced that it had started 2020 with negative deposit rates of around EUR 3 billion However, 2020 is expected to end with negative interest rates on deposits valued at around EUR 8 billion.
Banks charge negative interest rates as they are charged by the European Central Bank (ECB) to hold money on deposits. The ECB is trying to encourage more lending to stimulate economic growth.
Credit unions, corporations and pension funds have been paying negative interest rates on deposits for some time.
This has raised fears that negative interest rates will be imposed on retail customers next .
EBS has a cap on savings of € 500,000, while a large number of credit unions have savings caps of just € 10,000.
German fintech bank N26 announced last year that it had deposits of more than 50,000 euros imposed for new customers in the amount of 0.5 percent.
Banks now pay savers a maximum of 0.01 percentage points for sight deposits. The National Treasury Management Agency cut interest rates on a number of government savings products last week, which will hit savers hard.
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