NatWest threatens charges for deposits as negative interest rates loom
Customers could be charged for depositing money in their accounts after one of Britain’s biggest banks took a step towards negative interest rates.
Hundreds of thousands of NatWest business customers have been warned that they could be made to pay a fee for having a credit balance. The announcement opens the way for a high street bank to introduce negative interest rates — with savers effectively penalised for depositing money — for the first time in Britain.
A major high street bank has paved the way for the introduction of negative interest rates for the first time in Britain by warning customers it may have to charge them to accept deposits.
The warning by NatWest was made in a letter changing the terms and conditions for the bank’s 850,000 business customers, which range from self-employed traders, charities and clubs to big corporations.
It could mean that an account holder with £1,000 in a NatWest account could see that shrink to £999 or less the following year as the bank charges a negative rate of interest.
In its letter to customers, NatWest said: “Global interest rates remain at very low levels and in some markets are currently negative. Dependent on future market conditions, this could result in us charging interest on credit balances.”
The taxpayer-owned bank – whose parent is Royal Bank of Scotland – said it had no plans to make changes to the terms and conditions of personal account holders to allow it to charge negative rates.
Interest rates on government and corporate bonds fell steeply in the political turmoil that followed the Brexit vote. The Bank of England is now under intense pressure to cut its already historically low base rate from 0.5% to kickstart the economy, although a move into negative territory is not likely in the short term.
NatWest business customers are asking if negative interest rates are legal. They are asking whether they should take their cash out of the accounts and put it under the mattress to maintain its value.
“Hundreds of thousands of NatWest business customers have been warned that they could be made to pay a fee for having a credit balance.”
well we did tell you this would happen..years ago..soon it will be time for the first “bail in” as well..