end of penalty interest
ING-Bank abolishes negative interest again – other institutes are likely to follow
The ING-Bank cancels the negative interest rates for 99.9 percent of its customers.
© ROBIN UTRECHT/ / Picture Alliance
Trend reversal in negative interest rates: ING is the first major bank to abolish the custody fee for almost all customers. Other financial institutions are also considering this step.
Hundreds of banks and savings banks have introduced negative interest rates on savings over the past few months and years. Now customers can hope for a turnaround. Because the first major bank is abolishing the penalty interest rate for the vast majority of customers – and other institutions are also giving signals in this direction.
With ING Germany, the largest direct bank in the country announced on Tuesday that it would be eliminating the so-called custody fee for almost all private customers. Specifically, as of July 1, the allowances, up to which no negative interest is due, are to be raised for current accounts and overnight money from EUR 50,000 to EUR 500,000 per account. If you have less than half a million in your account, you no longer have to pay negative interest. “With the increase in the allowance for credit balances on the current and extra accounts, the custody fee will no longer apply for 99.9 percent of our customers,” says Nick Jue, CEO of ING in Germany.
Central bank rate hike expected
The bank justifies the step with the expected interest rate hike by the central bank. “We are keeping our promise to abolish the custody fee once the negative interest rates are eliminated for almost all customers before the European Central Bank makes a decision,” says ING CEO Jue.
The logic behind this: If the bank no longer has to pay penalty interest for parking money at the central bank, it no longer wants to charge its own customers the same. It is generally expected that the central bank will soon raise interest rates to counteract the high inflation. A first rate hike could take place as early as July. At present, the banks still have to pay 0.5 percent penalty interest to the ECB.
In the event that this so-called deposit facility is raised again to at least zero, numerous other large banks have already announced an end to negative interest rates for private customers, as a recent survey by the consumer portal Biallo has shown. “In the event that the rate of the deposit facility is zero or higher, the custodial fee will not be charged in private customer business,” said Deutsche Bank, for example. At Commerzbank it says: “As soon as interest rates reach zero, we will reduce the credit fees.” Other institutes made similar statements.
It remains to be seen whether and how quickly negative interest rates will disappear completely from the market. According to the comparison portal Verivox, 455 financial institutions are currently charging negative interest for private customers. The financial portal Biallo even counts 582 banks and savings banks with custody fees. The wave of institutes that introduced negative interest rates had recently weakened significantly. Now it could be broken.
The fact that ING is in such a hurry to abolish negative interest is also due to the fact that it wants to avoid trouble with existing customers who have not yet agreed to the introduction. According to the BGH ruling, this is necessary. The bank writes: “By increasing the allowances, ING Germany expects to convince customers in particular who have not yet agreed to the general terms and conditions including the custody fee, and that the bank will thus terminate fewer customers than previously planned.”
In addition, it has not yet been finally clarified legally whether custody fees are permissible at all. Some courts had recently declared negative interest rates to be inadmissible.