ZURICH Nov 22 Swiss banks would face mass
withdrawals by depositors if they were to introduce negative
interest rates for retail clients, UBS's chief economist for
Switzerland said on Tuesday.
Since January 2015, the Swiss National Bank (SNB) has
imposed a 0.75 percent charge on deposits with the central bank
above a certain threshold, part of the SNB's policy to weaken
demand for Switzerland's currency.
Banks are looking for ways to offset the cost from negative
interest rates but Daniel Kalt of UBS said that passing them on
to retail clients would be a step too far. "Otherwise you have a
bank run," Kalt said at a media conference in Zurich.
Swiss banks forked over 1.2 billion Swiss francs ($1.19
billion) to the SNB to park money there last year. Nevertheless,
almost all of Switzerland's roughly 260 banks have so far held
off from passing on negative interest rates to retail customers.
Alternative Bank Switzerland, whose investment criteria mean
it keeps a large portion of cash with the SNB, is the lone bank
to pass on negative rates to everyday clients.
However, some, such as PostFinance, have moved to
charge wealthy clients a fee for holding larger deposits.
"Cash, as banks offer it, is a subsidised asset because we
do not pass on negative interest rates," Kalt said. "Therefore
for banks, cash is a certain problem. With each million in cash
we get, it's a loss-making business for us."
Swiss banks held 1.723 trillion Swiss francs worth of
customer deposits at the end of 2015, according to the Swiss
National Bank's 2015 annual report on the sector.
($1 = 1.0098 Swiss francs)
(Reporting by Joshua Franklin; editing by Mark Heinrich)