HSBC Plc. will start charging clients for deposits in a basket of European currencies.
The lender has told other banks about its plan to charge them for deposits in euros, Swiss francs, Danish krone and Swedish krona — all currencies of countries that have negative interest rates, the Financial Times reported Wednesday.
The decision, which underlies industry-wide efforts to protect profit margins, will affect the bank’s clients in Hong Kong, Britain and Germany starting this summer and follows similar moves by Swiss, German and Nordic banks.
It will not affect deposits by individual or corporate customers.
“HSBC charges banks for deposits they hold with us in currencies where negative interest rates apply,” the British lender said in a statement.
“Banks affected have been notified and we continue to monitor the situation.”
The unusual step comes after the European Central Bank became the first big central bank to announce a negative deposit rate, in effect a penalty on banks parking their surplus cash, last year.
Central banks in Sweden, Denmark and Switzerland have also imposed negative policy rates of between minus 0.25 per cent and minus 0.75 per cent as they battle deflation and currency pressures.
HSBC wrote to the banks that will be affected this week and will introduce the negative interest rates on Aug. 1.
German, Swiss, Danish and Swedish banks have been at pains to avoid subjecting the general public or small businesses to fees for depositing cash, preferring to impose levies only on the biggest corporate and institutional customers.
UBS introduced negative interest rates for interbank accounts in 2012 for balances in Swiss francs and in euros, a person familiar with the situation said.
Credit Suisse said in January that negative deposit rates had “long applied to the credit balances of financial institutions”.
More recently, in the wake of negative interest rates from the Swiss National Bank, both UBS and Credit Suisse have also applied negative interest rates to some corporate and other institutional accounts.
But they have so far held back on introducing negative rates on regular retail accounts.
Only Erhvervsbank, a small Danish bank, and Skatbank, a regional German lender, have bitten the bullet and announced plans to make retail customers pay to hold money in deposit accounts.
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