At the beginning of December, Credit Suisse informed its customers about introducing temporary excess balance fee (the threshold criteria is to be announced later) from the 10th of December. According to unofficial data, the excess balance fee will be about 0.75% p.a.
For the time being, the fee is supposed to be applicable to financial institutions only, not affecting private customers.
This measure is an evidence of the current situation for the US and European banks: low base rates (in Switzerland it is almost equal to zero) and increasing capital adequacy requirements.
This being the case, short-term deposits require reserving even more funds with Central Bank, generating almost no profit. For example, offered rates on short Swiss government securities maturing in less than 3 years are currently negative, i.e., investments in those will result in losses for the bank.
According to Credit Suisse management, the measure is aimed at relieving the bank’s balance and reducing it from 1.03 trillion to 900 billion francs next year.
Main rival of Credit Suisse – UBS bank has already implemented such practice from August 2011.
These facts evidence that in case low rates stay present for a long time and requirements to safety of the banking system continue to increase, the customers will have to pay for holding funds with safe and prestigious banks.