Spar Nord becomes third Danish bank to adopt negative interest on deposits (updated)

Spar Nord Bank A/S

03/10/2019 12:27

(Adds comment from FSA director, client survey results,
background)
    COPENHAGEN, Oct 3 (Reuters) - Danish lender Spar Nord
 SPNO.CO  said on Thursday it will impose negative rates on
large deposits by private clients, making it the third Danish
bank to do so, in a move that could send wealthy clients
running. 
    European banks say they are struggling under negative rates
imposed by central banks but few have imposed negative rates on
private clients so far.   
    "It is now clear, that negative rates are not a passing
phenomenon," CEO Lars Moller said in a statement.
    Spar Nord, Denmark's sixth biggest bank, will introduce a
minus 0.75% interest rate on deposits by private individuals
holding more than $110,000 in their accounts, while lowering the
already negative rate for corporate clients to 0.75% as well.  
    "We believe it is both natural and in line with the monetary
policy intentions of the ECB and Denmark's Central Bank that
negative rates to a larger degree also materialise on the
deposit side," Moller said.
    Denmark, which was among the first countries to introduce
negative rates in 2012, cut its key deposit rate to minus 0.75%
last month, a record low among developed economies. urn:newsml:reuters.com:*:nL5N2635FQ
    The second largest bank in Denmark, Jyske Bank, said in
September it had to pass on part of the costs of negative
interest rate to customers, when it announced a similar move. 
    Jyske said it hoped rates would not go any lower, but could
not make any promises.  urn:newsml:reuters.com:*:nL5N26B1AA 
    "At some point, there is a lower limit for how far central
banks will go, and I don't think we are far from it," Jesper
Berg, director of Denmark's financial regulator, told Reuters at
a banking conference on Thursday. 
    "We are not there yet, because people have not gone into
cash yet," he said. 
    A survey of 1,000 wealthy individuals in Denmark showed that
only 8% of respondents would accept paying interest rates on
their private deposits, with the remaining 92% wanting to pull
their money out of deposits and placing it elsewhere.
    The survey, published last week by Danish financial
publication Oekonomisk Ugebrev, showed that 7% said they would
take out cash and place it at home or in a deposit box at the
bank.
    "The bad scenario would be if people went into cash. That
would lead to pressure on the financial sector and a greater
risk of people being robbed and so forth," Berg said. 
    Spar Nord's new rate will apply from Jan. 1 2020. It
currently charges zero interest on accounts for individuals and
minus 0.5% on corporate accounts.
    ($1 = 6.8157 Danish crowns)

 (Reporting by Nikolaj Skydsgaard and Jacob Gronholt-Pedersen;
editing by Jason Neely)
 ((Nikolaj.Skydsgaard@thomsonreuters.com;))