Since the last interest rate cut by the European Central Bank (ECB) last year, a growing number of German banks have been demanding negative interest rates from private customers, according to an analysis by price comparison platform operator Verivox published on Wednesday.
In September last year, the ECB lowered its deposit interest rate from minus 0.4 to minus 0.5 percent, meaning that banks have to pay 0.5 percent penalty interest on deposits they place with the central bank.
According to Verivox, 126 banks in Germany currently demanded negative interest rates from private customers. “For many banks, the interest rate cut was the initial spark to also implement negative interest rates themselves in their private customer business,” said Oliver Maier, managing director of Verivox Finanzvergleich.
At the time of the interest rate reduction by the ECB, only 13 German banks demanded negative interest rates at all and savings balances below 100,000 euros (117,600 U.S. dollars) were not affected, according to Verivox. “At that time negative interest rates for private customers were still the absolute exception.”
Twenty-seven of the German banking institutions only offered to waive negative interests for savings “significantly below 100,000 euros” while at three banks, customers would even pay negative interest “from the first euro,” according to Verivox.
The negative interest rates of German banks would initially only apply to new customers, according to Verivox. “If a bank also wants to charge negative interest from its existing customers, it must agree this individually with those affected,” Maier said.
Verivox is evaluating the daily updated online price lists of around 800 banks in Germany. According to the company, it was the largest database for current overnight money conditions for private customers in Germany.
Negative interest rates exist not only for private individuals but also for institutional investors. On Wednesday, the yield on German ten-year bonds stood at almost minus 0.5 percent.