If you want to keep money at Alternative Bank Schweiz you are going to have to pay for it. That’s right, keeping your Swiss francs under your mattress will generate a relative yield to the francs held at this bank. This is a knock on effect of the Swiss central bank trying to maintain parity with and independence from (ha) the euro.
For those of us not banking in Switzerland this is mostly just another in a long list of economic warnings which keep piling up. China is in a quasi-recession. (Though the official data says that things aren’t as bad as many believe.) Japan is in recession. Canada (our largest trade partner) is in recession. Europe is limping along and now is adjusting to the Paris attacks and a refugee crisis.
On the other hand most traders now believe that the Federal Reserve will hike rates for the first time in almost a decade in a sign of general economic confidence. (But we’ll see on this.) So place your bets.
A tiny Swiss bank specialised in financing social and environmental projects will on January 1 go where no retail lender has gone before, applying negative interest rates on individual clients.The Alternative Bank Schweiz (ABS) caused shockwaves with a letter sent to all clients in mid-October informing them that it would begin imposing interest charges on deposits in 2016.
For current accounts, the bank said it would impose a -0.125-percent rate, while slapping a -0.75-percent rate on client deposits higher than 100,000 Swiss francs ($98,650, 92,420 euros)…
…In its annual study on the sector, the Swiss Bankers Association found that the central bank’s negative rate decision was hitting most of all banks specialised in wealth management, and that most preferred taking on the cost themselves for fear of seeing their clients abandon ship.