When the first domino has fallen, it can happen very quickly until many more follow: When Deutsche Skatbank was the first financial institution to charge negative interest for some of its customers in 2014, that was something new. Suddenly, contrary to their decades-long habit of money in the bank yielding interest, customers suddenly experienced the opposite. They had to pay if they parked too much money in overnight or current accounts. Since then, these penalty rates have continued to spread, at first more slowly, now faster, and more will follow. What once began with the small Skatbank has now reached almost 500 banks and savings banks across Germany, including many in the Frankfurt financial center and in the region.According to studies by the consumer portal Biallo, their number has increased fifteen-fold over the past two years; In Hesse, more than 30 institutes are charging negative interest rates.

Daniel Schleidt

Deputy coordinator of the business editorial department in the Rhein-Main-Zeitung.

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    Many customers cannot really understand the principle of negative interest because they grew up with money working in the bank, with interest and compound interest.

    The amount of bank deposits shows that Germans seem to have a good feeling to have certain amounts on their current account as security: if they need a new heating system, the car gives up, something needs to be repaired on the house many people want to have quick access to their money.

    But more and more banks are paying for it, including those from the Rhine-Main area.

    Customers of the Frankfurt-based Commerzbank report calls from their advisors who want to switch the money mainly into securities or an agreement on custody fees.

    The times of high interest rates are long gone

    From August 1, new Commerzbank customers and everyone who opened an account there after July 1, 2020, will have to pay negative interest on balances of more than EUR 50,000.

    The digital bank ING also announced last week that customers of a sum over 50,000 euros on overnight money or current accounts have to pay 0.5 percent interest per year.

    The times of high plus interest rates for savers are long gone since the European Central Bank pursued a loose monetary policy: Commercial banks currently have to pay 0.5 percent interest when they invest money at the central bank.

    Last year, German institutions gave the ECB 2.7 billion euros, and this fee is increasingly being passed on to customers.

    This creates the domino effect that is currently running through the industry: When the first banks start doing this, customers transfer their savings from there to the accounts of those houses that do not yet charge penalty interest.

    They, in turn, are suddenly faced with waves of credit balances, especially from wealthy customers, and for their part are thinking about negative interest rates in order to avoid the new type of banking tourism.

    There is a lot of money involved.

    According to calculations by the Frankfurt DZ Bank, the financial assets of German private households grew by 393 billion to 7.1 trillion euros in 2020.

    That is an increase of 5.9 percent and a new record.

    But when it comes to investing, German savers are risk averse; cash and deposits make up the largest part of their assets at over 40 percent.

    The result is waves of money that the banks don't even want.

    For example, the Frankfurter Volksbank recently reported on new customers who only wanted to park their money at the bank without wanting to establish a closer business relationship.

    Although the Volksbank is currently only charging custody fees for balances of more than 100,000 euros, in this case interest would also be considered from the first euro.

    Penalty interest in Offenbach from 25,000 euros

    While the Frankfurter Sparkasse also only charges penalty interest of 100,000 euros, other institutes start much earlier.

    Customers of Sparkasse Offenbach pay on overnight money accounts with negative interest rates of more than 25,000 euros.

    Even at Sparkasse Darmstadt, it starts with amounts over 25,000 euros, but only for accounts opened after March 1st.

    According to its own statements, the local savings bank received customer deposits of around half a billion euros in the past year alone.

    Sparkasse board member Jürgen Thomas suspects a kind of "money tourism" that needs to be stopped.

    Here, too, it is about custody fees, possibly from the first euro.

    But there are also counterexamples of banks that withstand the flood of customer deposits. "We don't send customers away," says the Sparda-Bank Hessen, even though the total of customer deposits there rose by 14 percent to 7.2 billion euros last year. Bank board member Markus Müller is reluctant to the widespread practice of his colleagues to charge customers with negative interest rates - and points out that the company's activities on the capital market were enough to generate income.

    Wiesbadener Volksbank also waives custody fees, even though, as board member Matthias Hildner says, the low interest rate policy of the central bank makes the banks breathless, "the framework conditions are tough". Therefore, at some point, you can no longer avoid further measures such as custody fees. The domino effect is likely to continue - and customers will have to get used to negative interest rates and think about alternative investments.