UBS introduces charges on euro accounts exceeding one million

ZURICH: UBS Group AG is extending charges on cash holdings to more of its customers, becoming the latest bank to pass on the euro region’s negative interest rates.

Starting in May, the world’s largest wealth manager will introduce an annual fee of 0.6% on accounts with cash holdings exceeding one million euros (US$1.08mil), the bank told clients in a letter seen by Bloomberg. UBS confirmed the content.

“This charge reflects our costs resulting from the continuing extraordinarily low interest rates in the euro area and increased liquidity regulations,” the bank said in the letter.

Clients who don’t agree to the conditions need to inform UBS and close their account by the end of April.

The European Central Bank (ECB) is trying to revive the eurozone economy by making banks pay to park their money at the ECB rather than lend or invest it, and by purchasing bonds to drive down borrowing for companies.

Among other banks seeking to ease the pain of negative rates, Swiss wealth manager Julius Baer Group Ltd is selectively charging euro clients, the bank said during its fourth-quarter earnings call. Bank of New York Mellon Corp, which holds money for institutional investors, began charging for euro deposits more than two years ago. Goldman Sachs Group Inc and Credit Suisse Group AG were also among firms passing on the ECB’s negative interest rates, people said at the time.

UBS and Credit Suisse are already charging some wealthy customers and institutional clients for large cash deposits in Switzerland, where the central bank introduced negative rates more than two years ago to fend off interest in the franc. The two banks’ combined average of deposits subject to the 0.75% charge quadrupled last year from 2015, according to the Swiss National Bank.

Migros Bank AG, a closely held Swiss retail lenders, is lowering its threshold for deposits subject to 0.75% interest. Come July, the fee will apply to customers with more than 1 million francs and corporate clients with more than 5 million francs. Migros currently charges for deposits of 10 million francs or higher.

The new UBS fee will be calculated and debited daily and applies to the total combined balance in multiple accounts held by the same customer. It doesn’t apply to euro accounts held in other investment advisory or discretionary mandates. – Bloomberg