Negative rates at Swiss banks seem to invite customers to move cash into gold


UBS' Rich Clients to Feel Negative Rates Pain as Fees Extended

By Patrick Winters
Bloomberg News
Tuesday, August 6, 2019

UBS Group plans to expand a policy of charging rich clients for holding excess cash in their accounts as negative interest rates in Europe are poised to stay.

The bank, which has made wealth management its central focus, plans to charge its Swiss clients an annual fee of 0.6% on deposits of more than 500,000 euros ($560,000). The fee previously kicked in at 1 million euros.

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Like Swiss rival Credit Suisse Group, UBS is caught between the prospect of losing money to hold client deposits and imposing fees that could prompt customers to take their business elsewhere. Amid an extended period of ultra-low and negative interest rates, the lenders have to pay central banks to park excess cash in Swiss francs or euros.

UBS' decision comes after Credit Suisse said it will impose a fee of 0.4% on customers with euro accounts of more than 1 million euros from September. UBS has already said it will introduce negative rates for clients holding large Swiss franc balances, while Credit Suisse said it is also considering the step.

Clients of UBS can mitigate the 0.6% charge by moving cash into "fiduciary call deposits" outside of Switzerland -- financial instruments that can be called within two working days, the bank said. Those deposits are subject to a 0.375% annual fee. The best scenario for the bank is when clients move their cash into equities or bonds. ...

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