Negative interest rates for private bank clients

After introducing negative deposit rates for its business clients in October, BankNordik will soon start charging its private clients for keeping money in their bank accounts too.

Negative deposit interest rates mean that instead of receiving money on deposits in the form of interest, depositors must pay regularly to keep their money with the bank.

The negative interest rate for private clients will be introduced on 1 March next year.

“The expenses associated with providing loans have been on a steady increase over the past few years, and we now see no other option than to lower our deposit rates,” says Árni Ellefsen, CEO of BankNordik, who cannot rule out further reductions in the future.

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Private clients, including pension savers, with deposits of more than DKK 500,000 will be charged a 0.75-percent interest on retail deposits exceeding DKK 500,000.

This means that, for example, a private client will pay DKK 750 in interest on a DKK 600,000 deposit.

The negative interest rate does not apply to clients aged 29 or below.

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The low interest rates also mean that BankNordik has seen a need to cut 10 full-time positions, and according to Ellefsen, a further 15 positions are at risk.

He adds that the introduction of negative interest rates for private clients, along with lower interest rates in the bank’s other markets, Denmark and Greenland, and cutting down on staff will improve the bank’s operating profits by some DKK 40 million.

Translated by prosa.fo