Switzerland's Two Biggest Banks To Charge Some Clients For Swiss Deposits; Julius Baer Mulls Options

Tom Burroughes

27 January 2015

Shockwaves caused by Switzerland’s ending of its cap on the country’s currency exchange rate continued, as reportedly said it would start charging for certain large client account balances in the Alpine state.

However, the country’s biggest bank is understood by WealthBriefing not to be introducing such charges for private clients.

The issue is around how interest rates in Switzerland on deposits are now negative, reflecting the surge in the rise in the Swiss franc against the euro and the fact that money has poured into the country from investors seeking a safe haven from the troubled eurozone recently.

A report by Reuters quoted a spokesperson for UBS as saying: "These extraordinary market conditions, coupled with increased regulatory requirements in relation to banks' liquidity obligations, have resulted in UBS introducing an individual deposit charge for large account balances held by corporate and institutional clients as well as by legal entities.”

This publication is in contact with UBS seeking comment.

Credit Suisse, the country’s second-largest bank is planning to impose charges on large corporate clients and institutions for using Swiss franc accounts. In a statement earlier this month, Credit Suisse said: “Credit Suisse is not currently planning to introduce commission on credit balances or negative interest rates in the case of savings accounts. Corresponding measures have long applied to the credit balances of financial institutions. In view of current developments, commission on credit balances is being introduced in the case of institutional clients and large corporate clients. Clients are being informed individually about this measure. The rules referred to are adapted to the latest interest rate and market conditions on an ongoing basis.”

The third-largest bank, Julius Baer, told WealthBriefing it is monitoring the situation but has not yet decided whether to pass on the cost of negative interest rates to customers.

Earlier in January, the Swiss National Bank abandoned its SFr1.2 cap on the exchange rate of the Swiss franc against the euro, ending a system in place since September 2011. At one stage the Swiss franc surged by as much as 40 per cent, and a number of banks have issued reports on the impact on their profits from such a move. Credit Suisse, for example, has commented on the impact (see here).

UBS is due to issued 2014 and fourth-quarter results on 10 February.