ECB Repercussions

Paying For What You Already Own

  • Why it matters

    Why it matters

    The ECB decision to charge banks fees to park their reserves (negative interest rates) is forcing fees on bank depositors, lowering the real value of their holdings. Savings banks’ profit margins are also under serious pressure.

  • Facts


    • The European Central Bank in June 2014 began charging banks that park their excess reserves with the central bank. The “negative deposit rate” is currently 0.4 percent.
    • The ECB hopes the charges will ultimately motivate consumers and companies to buy or invest their surplus funds and support economic growth.
    • Retail customers have so far been spared negative interest rates in nearly all cases, but many have been forced to pay for bank services which used to be free.
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main 68400287 source Julian Stratenschulte DPA – savings bank Sparkasse in Hannover pedestrians logo S
German savings banks are passing the ECB's costs on – to their owners. Source: Julian Stratenschulte / DPA

The European Central Bank’s loose monetary policy is having a serious effect on Germany’s savings and cooperative banks, a Handelsblatt survey shows. Faced with negative interest on their ECB accounts – essentially a fine for depositing reserves with the ECB – German banks have passed on the charges to corporate customers, forcing them to pay for the money they deposit in their accounts.

Most of Germany’s biggest commercial banks have already slapped charges on deposits over the past year. Now, the biggest savings and cooperative banks in the country are following suit. Eight of Germany’s 10 largest savings banks are now charging their largest customers, the survey shows.

That includes charging their municipal customers, meaning cities and regional authorities – a particular paradox since savings banks tend to be owned by the local governments themselves. Cooperative banks, known as Volksbanken in German, are owned by their members, which could also include municipalities.

Effectively, that means local governments are paying the fees to themselves.

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