ZCZC
BCN-17
ITALY-BANKING-CONSUMERS
UniCredit readying to pass on negative rates to big depositors
PARIS, Oct 10, 2019 (BSS/AFP) – Italian giant UniCredit is readying to
pass on negative interest rates to clients with deposits of over 100,000
euros as soon as next year, its chief executive said Wednesday, which would
make it the first big eurozone bank to do so.
“More and more these negative rates are going to be passed on to clients
with large deposits,” Jean-Pierre Mustier said on French TV channel BFM
Business.
Europe’s commercial banks have been labouring under ultra-low and even
negative official interest rates in recent years as the European Central Bank
tries to boost the economy with cheap cash.
Earlier this month the ECB pushed its deposit rate to minus 0.5 percent,
which means commercial banks are paying the central bank to hold their
reserves.
Although negative rates have squeezed banks’ profitability so far only a
few small eurozone banks have directly passed on the cost depositors, and
then only to large clients.
Mustier indicated UniCredit would take a similar approach.
“We must protect the most vulnerable bank clients, those covered by
deposit insurance, and then on a case-by-case basis we could consider passing
negative rates onto large companies or to certain big clients while offering
them a certain number of alternatives,” said Mustier.
In addition to being Italy’s top bank, UniCredit is also the leading bank
in Austria and has a large market share in several eastern European
countries.
Mustier said that banks were being forced to take the logic of negative
rates to its conclusion and pass them on to clients.
“Negative interest rates shouldn’t stop at banks’ balance sheets,” he
said.
Eurozone banks have also shed thousands of jobs as they try to adapt to
ultralow interest rates and growing digitalisation, including UniCredit which
as cut 14,000 positions in the past three years.
BSS/AFP/HR/1055