Could banks charge businesses to hold cash?
*Financial Times, by Emma Dunkley, July 26, 2016
‘Millions of customers face paying charges to deposit cash with Royal Bank of Scotland and NatWest if the Bank of England cuts interest rates below zero. The state-backed bank has written to 1.3m business clients to say record low rates ‘could result in us charging interest on credit balances.’
A move to introduce negative interest rates would render RBS the first bank in the UK to make customers pay for depositing cash. The bank said it would not affect personal customers if it came into force. The plan comes amid speculation of a rate cut and analyst views that rates could remain lower for longer following the vote to leave the EU. UK interest rates have been stuck at a record low of 0.5 per cent since March 2009.
Economists are forecasting that the BoE could reduce rates to 0.25 per cent when it meets next week. However, Mark Carney, BoE governor, told MPs in April: “We think we could move base rate closer to zero but have not said we have an appetite for negative interest rates.”
Small businesses say they are ‘deeply concerned’ about the warning from RBS.”
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