Swiss bank Postfinance has shocked investors with news of a 3 per cent negative annual interest rate on certain types of deposits.
Negative interest is where a lender charges customers for holding money in their savings accounts instead of paying them.
On October 24, Inside Paradeplatz, a popular blog covering the goings-on in the Zurich financial scene, published a letter Postfinance had sent to one of its clients. In it, the bank announced that as of November 1, it would charge 3 per cent annually in fees on deposits exceeding 100,000 Swiss francs (€107,974).
The firm wrote that the move was motivated by “the very low-interest rate environment and regulatory reasons”. It added that for the calculation of the threshold the balances of all the clients’ Swiss Frank accounts would be summed up and that further adaptations of the rate and the threshold were possible.
Lukas Hässig, founder of Inside Paradeplatz, wrote the negative interest rate was “at an unprecedented level”, adding that “no player before has dared to punish savers like this”.
A spokeswoman for Postfinance later confirmed to Swiss newspaper NZZ the authenticity of the letter. She added that the new negative interest rate regime would only apply to “several hundred large clients” while private customers were not affected.
The letter has nonetheless caused a stir on Switzerland’s banking scene. Reportedly, the affected clients include several pension funds – which form a main pillar of the country’s old-age provision system.
Lukas Müller-Brunner, director of the Swiss Pension Fund Association (Asip), said on October 25: “Pension funds – with all due respect to the banks’ regulatory requirements – are dependent on keeping part of their insured members’ savings liquid. A pension fund cannot pay out pensions in shares.”
Andreas Dietrich, professor of finance at the University of Luzern, told NZZ that the current interest rate environment was challenging for savings banks. Since June, the Swiss National Bank (SNB) has cut the base rate to zero.
“Postfinance needs to make money and they cannot do it with interest rate arbitrage currently,” Dietrich said. For regulatory reasons, the bank is also not allowed to give loans.
Dietrich said she assumed Postfinance was trying to push its clients to move money from simple deposits to more sophisticated investment products for which the bank could charge higher fees.
Postfinance – a subsidiary of Switzerland’s state-owned national postal service – has around 2.4 million clients in Switzerland. With a balance sheet of 112 billion Swiss francs (€120.9 billion) in 2024 it is the country’s third-biggest bank behind UBS with 1,565 billion francs (€1,689.8 billion) and ZKB with 203 billion francs (€219.1 billion).
