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20 Aug, 2019 15:06

Why the negativity? Rich Danes will be forced to PAY bank to hold their deposits

Why the negativity? Rich Danes will be forced to PAY bank to hold their deposits

Wealthy clients of Denmark’s third largest bank, Jyske Bank, will have to pay to keep savings there instead of earning interest. The bank plans to apply negative interest rates to the deposits.

The measure will only affect clients who hold more than 7.5 million kroner (around $US1.1 million) in their accounts. They will have to pay a negative interest rate of 0.6 percent for their deposits. In practice, it means that if a person has $1.5 million in his account, they will have to pay the bank $9,000 to keep savings there.

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Jyske’s chief executive Anders Dam explained that the negative interest rate environment which has impacted the local market since 2012, now “seems to be of a rather permanent nature.” This has cost the lender money to hold customers’ savings, said the banker.

“Market expectations indicate that the negative interest rate environment will last for several years,” the official said in a statement on the bank’s website on Tuesday.

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Negative interest rates will come into force starting December 1. However, it is expected that only a small number of wealthy customers will be affected, according to an assessment by economist Per Hansen of investment firm Nordnet, cited by the Local.

The same bank made headlines earlier this month when it offered, in effect, to pay its customers to borrow money after Jyske launched its first negative interest rate mortgage. According to the terms of the 10-year deal the charge is minus 0.5 percent a year, but the homeowners will not be given physical money; clients’ debt will be reduced each month by more than the amount they pay.

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