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The RBS banking group has warned 1.3 million customers they could be charged negative interest rates if the Bank of England cuts base rates below zero.
The group, which includes NatWest, wrote to its business and commercial account holders about the potential changes, which mean they could lose money even when they are in credit.
The letter 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 on credit balances."
The Bank of England's base rate currently stands at the historically low rate of 0.5%, where it has been for more than seven years - and some economists believe it should be cut further to stimulate the economy.
Source: Sky News
From October 1st, the Dutch bank [ABN Amro] is adjusting its conditions to state that the bank can give negative interest rates to account holders with a business checking or -savings account, ANP reports.
Source: NL Times
(Score: 2) by martyb on Thursday July 28 2016, @12:53PM
I've not seen this discussed here; please forgive me if I missed it.
There's other option to accepting a negative interest rate on one' deposit... arbitrage. Certainly a much higher risk, but I have no doubt but that some of the larger players (read that the wealthy) are employing this at least to some extent.
Take some amount of your holdings and deposit them in a foreign institution paying a higher interest rate in a different currency, wait for it to appreciate and/or you need to liquidate, cash out and convert back to original currency. Of course, there will be a cost involved in each of the currency conversions. Also, one runs a risk of guessing wrong on exchange rates and find that the difference in appreciation between the local/foreign currencies ends up being a net loss, as well. OTOH, there may be enough gain that one comes out substantially ahead.
A variation on this concept is to invest funds in a foreign company where, again, one can possibly gain from currency conversions on each of the buy and sell transactions. Or, one could lose on currency conversions, too.
Not for the faint of heart, nor but for some fraction of one's investments. Not putting all of one's eggs in a basket and all that.
Separately, paying a bank or other financial institution to hold one's assets and ensure they are safe has a value, too. Under the mattress exposes one to risk of fire, theft, and so on whereby stored at a bank, one has insured assets (well, at lest in the USA with the FDIC; don't know about other countries).
Wit is intellect, dancing.