Switzerland's biggest banks, UBS and Credit Suisse, have paid more to park money with the Swiss National Bank (SNB) this year, data showed on Thursday. Banking statistics published by the SNB for May showed deposits by the two biggest banks which were subject to negative interest rates have jointly doubled since the end of 2015. The SNB has since January 2015 charged domestic banks 0.75 percent on deposits stored with the central bank which exceed 20 times their minimum reserve requirement.
Combined, UBS and Credit Suisse surpassed the central bank's exemption threshold in June 2015, currently storing 26.7 times their joint minimum required assets with the SNB. The SNB does not publish statistics on individual banks but publishes figures on Switzerland's big banks, a category which includes only UBS and Credit Suisse. It is unknown, however, how much of these charges the two banks have passed on to their clients and how much of the penalty they have shouldered themselves.
Negative interest rates are part of the SNB's two-pillared approach to reduce the franc's attractiveness and stem inflows to the safe-haven currency. The Swiss franc typically appreciates during times of uncertainty or market turmoil, putting pressure on exporters to lower prices or lose orders and reducing gains made by Swiss companies abroad. The European Central Bank has a deposit rate of -0.4 percent.
The SNB generated 1.2 billion Swiss francs from negative interest charged to banks and other deposit-holding institutions in 2015. Many banks, already hit by turbulent market conditions and tightened regulations since the financial crisis nearly a decade ago, have complained that negative interest rate are doing more damage than good. To lighten the penalty they must carry, banks have passed negative interest rates on to institutional investors such as insurance companies and pension funds. Certain banks have charged private clients holding large sums of cash in their accounts as well.
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