The markets are spinning: the central banks are raising interest rates one after the other. This is not yet reflected in the bank customers’ accounts. More than 450 banks still charge penalty interest for credit balances. Particularly annoying: both the public savings banks and the cooperative Volksbanks want to wait and see.
Credit in the bank and pay a fine for it? The majority of Germany’s bank customers have had to put up with this unusual manner over the past two years. The reason: The banks themselves were asked to pay by the European Central Bank (ECB) if they parked their customers’ money there. The ECB charged so-called negative interest rates because it did everything to ensure that money was not hoarded but spent. That should keep the economy going.
But that is over now. The cycle is reversed. The central banks have to act because the cheap money has not least boosted inflation. From the USA to England to Australia, national banks have already raised interest rates. The ECB is still hesitating, but it looks as if it will also decide to raise interest rates at one of its next meetings and thus at least make an attempt to curb inflation. Such a decision could reach the bank customers. First of all, the so-called “custody fees” for credit balances would have to be eliminated. After that, interest on deposits should even become standard again.
While the latter is still a long way off, the first banks are already taking the first step. The direct bank ING has informed its German customers that the allowances for credit balances on current and call money accounts will increase from the current 50,000 to 500,000 euros per account. Up to this level, there is no longer any negative interest.
Oliver Maier, Managing Director of the comparison portal Verivox, considers this to be more than a marketing step: “The tenfold increase in the exemption at ING is a clear signal to the entire industry. Bank customers who do not have an account with the direct bank could also benefit indirectly from this. If large houses improve their conditions, the pressure on the competitors to become active also increases. It is therefore quite possible that other banks will follow suit in the next few days and weeks and also increase the allowances.” In fact, with the Oldenburgische Landesbank, another bank has already taken the step of increasing the allowance to half a million euros.
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A large number of banks, however, have less of an ear for the market or are simply waiting until the ECB has made a decision. The comparison portal lists more than 450 financial institutions that still charge negative interest even for lower balances. The number has risen by around five percent in this year alone, in which there have been signs of interest rate hikes for months.
The large private banks in Germany are cautious. Deutsche Bank, which has been charging custody fees in private customer business since mid-May 2020, says it is waiting for the ECB. If the “changes the rate of the deposit facility, we will adjust the fee in the retail banking in the short term”. Even the partially state-owned Commerzbank does not want to do without the extra income that comes from the negative interest rates: “We are taking a close look at the development and will react if the rising interest rates prove to be sustainable.”
“Wait and see” is also the motto at most public savings banks and the cooperative Volksbanks. The Savings Banks and Giro Association (DSGV) explains that the market will react to changing conditions. The local institutes would decide when and in what form. One of the largest banks in the group, the Hamburger Sparkasse, explains when asked: If the ECB raises interest rates, it will do the same. The Federal Association of German Volksbanken and Raiffeisenbanken (BVR) points out that each institute decides on its own products and conditions.
However, many have not yet decided. Of the more than 450 banks with custodial fees, around two-thirds belong to the public or cooperative banking camp – with both groups together also operating the vast majority of independent banks in Germany, which also explains this high number in addition to a certain persistence that is not in the interests of the customers .
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The article “Interest is coming back – but only later for savings banks, Volksbanks and Co.” comes from WirtschaftsKurier.
