Swiss banks paid 970 million Swiss francs ($1 billion) in negative interest rate charges in the first six months of 2017, according to central bank data, up 40 percent year-on-year as clients continue to hoard cash. The Swiss National Bank (SNB) is charging a 0.75 percent fee on large deposits at the central bank, a cornerstone of its monetary policy since January 2015 which is aimed at weakening Switzerland's currency.
It is a burden for banks, especially at a time when wealthy clients are still keeping more than a fifth of their holdings in cash despite buoyant financial markets, recent earnings at the biggest private banks show. The amount rich clients are opting to keep in cash has largely come down from the record-high level seen during the financial crisis but is falling very gradually.
UBS, the world's biggest private bank, said last week the cash holdings at its flagship wealth management division came down in the second quarter to 21 percent of invested assets from 21.5 percent. UBS Wealth Management has 1.04 trillion francs in invested assets.
Credit Suisse, the fourth-largest private bank in the world by assets, said cash holdings across its money managing units held steady in the three months to end-June at around 30 percent. Holdings in cash at Julius Baer, Switzerland's third-biggest private bank, came down to 22 percent from around 23 percent during the first six months of 2017. "It's interesting to compare right after the crisis in 2008, cash levels were at 34 percent, and the low we have experienced in 2007, pre-crisis. There the cash was around 16 percent," Julius Baer Chief Financial Officer Dieter Enkelmann said last week. "So there would be still room to go down if the markets would continue to do well."