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UBS lowering threshold to charge depositors for negative rates, closing 40 Swiss branches
UBS Group plans to lower the threshold for customer deposits that will be subject to a charge as the bank deals with the prospect of low and negative interest rates for the foreseeable future.
Starting in July, the fee will apply to clients with deposits of more than 250,000 francs (S$373,400) or the same amount in euros, according to a memo to employees. The previous threshold was more than two million francs or 500,000 euros. Clients with a mortgage or investments in UBS funds may be exempt from the charge.
The UBS fee will only be applied to the part of a client's deposit that exceeds the threshold, according to the memo.
Banks including UBS have seen their profitability eroded by more than half a decade of negative interest rates, which effectively make banks pay for holding clients' cash. Many European lenders are pushing depositors to put more of their money into investment products, as a recession sparked by the corona-virus pandemic increases the probability that rates will stay low or negative for some time.
This year, UBS also began charging wealth clients who don't live in Switzerland 330 francs a month for holding cash deposits of 500,000 francs or less.
UBS also plans to close around 40 branches in Switzerland by March as the pandemic boosts demand for digital banking, Axel Lehman, the bank's Swiss unit chief, said in a separate memo to employees. That will affect 150 employees, who will be redeployed across the bank. As part of the switch to serving customers digitally, the bank is launching a pilot programme in March to train advisers for more remote advisory and digital sales.
The bank has said that as much as 30 per cent of its employees could permanently work from home. BLOOMBERG