UniCredit to apply negative rates only on deposits over 1 mln euros (updated)

Spar Nord Bank A/S

14/10/2019 12:48

(Adds quotes, background)
    MILAN, Oct 14 (Reuters) - UniCredit  CRDI.MI  will only
apply negative rates to customer deposits of more than 1 million
euros ($1.1 million), the Italian bank said on Monday,
clarifying comments by its CEO last week which drew angry
reactions from unions and consumer groups.
    European banks are grappling with the consequences of the
European Central Bank's September decision to cut its key
deposit rate further into negative territory, making it tough
for banks to earn money from their traditional lending business.
    UniCredit Chief Executive Jean Pierre Mustier last week said
the bank was working on measures to pass on the European Central
Bank's negative rates to customers holding more than 100,000
euros in their accounts.  urn:newsml:reuters.com:*:nL5N26U440
    Italian banking unions were critical of Mustier's
announcement which they described as "reckless".
    Consumer group Codacons said it would fight banks in the
courts that planned to hit customers with negative returns on
deposits.
    A UniCredit spokesman said the negative rates would only
apply to clients with more than 1 million euros in their bank
accounts, meaning less than 0.1% of the bank's client base. And
customers will be offered a number of alternatives.
    "We will offer as an alternative investments in money market
funds targeting positive returns, with no fees charged," the
spokesman said.
    "For ... deposits with a balance in excess of the 1 million
euro threshold, ad hoc measures will be discussed with clients
to take into account the extraordinary changes in the
macroeconomic environment." 
    Last month, Mustier, speaking in his capacity as Chairman of
the European Banking Federation earlier this month, urged the
ECB to take action to reduce the impact of negative interest
rates on banks, recommending general charges for cash deposits.
 urn:newsml:reuters.com:*:nL5N26O3O9 
    Italy has high levels of private savings, where people have
been increasing current account deposits this year to reach 1.17
trillion euros in August, according to Italy's central bank.
    Banks in Italy are currently free to charge for cash
deposits, but most avoid doing so, fearing depositors would
transfer their savings to other lenders.
    Italian banks are taking countermeasures against negative
rates through fees, Banca Generali  BGN.MI  CEO Gian Maria Mossa
said in an interview published on Monday.
    "UniCredit had the courage to stir up a debate which was
already taking place abroad, for example in Switzerland ...
(but) I don't think in the end single banks will apply negative
rates," he told daily La Stampa.  
    UBS  UBSG.S  in July said it would impose from November a
negative interest rate of 0.75% on wealthy clients who deposit
more than 2 million Swiss francs ($2 million) with its Swiss
bank.  urn:newsml:reuters.com:*:nL8N24W7FE
    In Denmark, which was among the first countries to introduce
negative rates, Spar Nord  SPNO.CO  said earlier this month it
would impose negative rates on large deposits by private
clients, making it the third Danish bank to to do. urn:newsml:reuters.com:*:nL5N26O2A7
 urn:newsml:reuters.com:*:nL5N2635FQ
    

       ($1 = 0.9064 euros)


($1 = 0.9952 Swiss francs)

 (Reporting by Gianluca Semeraro, editing by Valentina Za and
Jane Merriman)
 ((gianluca.semeraro@tr.com;))