Credit Suisse scraps negative rates for Swiss private clients



By Brenna Hughes Neghaiwi

ZURICH, June 29 (Reuters) - Credit Suisse CSGN.S is scrapping the negative interest rates it has charged wealthy Swiss clients since 2020, the lender said on Wednesday, as its economists anticipate a further rate hike in Switzerland this year.

"Despite the continued negative interest-rate environment, Credit Suisse will repeal the account balance fee and thus move away from using negative interest rates in Swiss francs as of July 1 for the private client business," the bank said in a statement.

In its first rate hike in 15 years, the Swiss National Bank (SNB) in June raised its policy interest rate to -0.25% from the -0.75% level it has deployed since 2015.

Governing board members have signalled further hikes may follow, spelling a potential end to the negative interest rates commercial banks have had to fork out to hold money at the SNB for the past seven years.

"The economists at Credit Suisse anticipate that the prime rate in Switzerland will be raised further over the course of the year," Credit Suisse said.

The move places Credit Suisse ahead of larger rival UBS UBSG.S in scrapping negative rates for clients. Several smaller banks, including Valiant, Vontobel VONN.S and regional lender Aargau Kantonalbank, have already done so.

Commercial banks have come under pressure since the Swiss National Bank introduced negative rates in December 2014, soon cut further to a record low of -0.75%. That policy cost commercial banks 1.2 billion Swiss francs in 2015 to hold deposits above a certain threshold with the central bank.

Banks were at first reticent to pass these charges on to private customers, saying such a move could "trigger a bank run Link", but over time they began offloading more of these costs.

UBS in July 2019 announced Link it would begin imposing a 0.75% fee on wealthy clients with deposits above 2 million Swiss francs that November, a move soon followed Link by Credit Suisse.

UBS further lowered that threshold to 250,000 Swiss francs in 2021, as then-Swiss banking head Axel Lehmann -- now the chairman of Credit Suisse -- spoke of contending with negative interest rates "for years to come Link".

However, monetary policy conditions have quickly shifted in 2022 as central banks look to fight resurgent inflation, leading to a spate of rate rises in June.
Reporting by Brenna Hughes Neghaiwi and John Revill; Editing by Riham Alkousaa and Michael Shields

Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.

All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.

Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.

We are using cookies to give you the best experience on our website. Read more or change your cookie settings.

Risk Warning: Your capital is at risk. Leveraged products may not be suitable for everyone. Please consider our Risk Disclosure.