Savers feel the bite of negative interest rates
Well-heeled Germans considering putting their savings in Berliner Volksbank now have cause to think again.
Well-heeled Germans considering putting their savings in Berliner Volksbank now have cause to think again.
From the start of this month, anyone opening an account will not only earn no interest on any deposits above €100,000 (£87,000), they will also have to pay 0.5% a year for the privilege of having the bank look after their cash.
Other banks are also reported to be considering introducing what have been dubbed strafzinsen (punishment rates), as the effects of the ultra-loose monetary policy run by the European Central Bank (ECB) — already causing ructions in the financial world — make an impact on consumers.
Falling savings rates have been an especially sensitive topic over the past few years in Germany, where people are often reluctant to buy shares and where home ownership, at about 50%, is close to the lowest in Europe.
On average, Germans hold more than 40% of their financial assets in the form of bank deposits, and the savings rate, at about 10%, is almost twice the average in the eurozone.
When ECB president Mario Draghi again cut interest rates last month, the tabloid Bild published a photomontage of the outgoing bank chief with fangs, dressed as a vampire.
“Count Draghila is sucking our accounts dry,” said the headline. “The horror for German savers goes on and on.”
According to Germany’s banking lobby, the ECB’s low-rates policy is costing its members €2.4bn a year — a financial burden they are keen to share. Yet the banks are aware that they will have to tread carefully to avoid provoking a backlash and driving away customers. Rather than imposing negative rates across the board, most appear likely to quietly increase fees and charges instead.
About 400 of Germany’s 1,300 banks and sparkassen (savings banks) have already done just that this year, according to Biallo, a financial portal.
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