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Credit Suisse scraps negative interest charges for private clients

Red piggy bank full of Swiss francs
Negative interest rate charges may soon become a thing of the past for Swiss bank account holders. Keystone / Gaetan Bally

Switzerland’s second largest bank, Credit Suisse, has announced it will no longer pass on negative interest charges to private clients from July 1.

On June 16, the Swiss National Bank surprised the markets by raising its benchmark interest rate by half a percent in response to rising inflation, but rates are still in negative territory at -0.25%.

The central bank had imposed a -0.75% rate in 2015 after abandoning its policy of defending the Swiss franc with a peg to the euro. With this shock move, the SNB began charging commercial banks for holding their cash in its vaults.

High street banks soon began passing part of this cost onto wealthy clients and businesses as they collectively faced annual bills from the SNB of around CHF2 billion ($2 billion).

The SNB gradually granted more exemptions from the penalties, but the central bank still collected CHF1.26 billion last year, raising the total amount charged to more than CHF11 billion during the negative interest rate period.

Credit Suisse currently passes on the full SNB fee to private clients with cash deposits of more than CHF500,000, rising to CHF2 million when investments in property and securities are included. But this charge will be lifted as of July 1.

Some smaller Swiss banks have already announced an end to negative interest charges, but Credit Suisse is the first major player to make this move.

The exemption threshold for corporate clients will be raised from CHF1 million to CHF3 million, the bank told SWI swissinfo.ch.

Credit Suisse economists expect further interest rate hikes from the central bank later this year.

In June, price comparison website Moneyland published an overview of negative interest chargesExternal link across all banks in Switzerland.

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