It seems that the days when Swiss banks were preparing to subdue owners of small deposits under negative interest rates have a far-fetched idea that is not very far away, as they were reported years ago.
A recent banking study confirms that the banking sector is now less resistant to the temptation to drain the accounts of small clients by subjecting their accounts to negative interest rates.
The study revealed that the proportion of banks, which had flatly refused to impose negative interest on young savers, has melted like snowmelt under the sun since 2015, the first year that the Swiss National Bank (the central bank) introduced negative interest rates.
According to figures from giant consulting firm, Ernst & Young, the proportion of banks refusing to impose negative interest on small depositors fell to 21 percent from 70 percent five years ago.
Patrick Schäferer, a partner at Ernst & Young - Switzerland, said the change in the mentality of provincial banks is particularly striking.
Moreover, the majority of banking institutions (55 percent, compared to 33 percent a year ago) now want to lower the threshold at which negative rates begin to be applied to deposits. Schäferer added that negative interest rates applied to wealthy customers are a reality, and the question now is how long will the banks be able to exempt young savers?
"The banking sector is still waiting, and we are waiting for the first bank, who will dare to take the step," according to Ernst & Young's partner, adding that passing on some of the costs of negative cost costs to young customers is a more likely lever than charging them for mortgages. Real estate, an alternative that is described as "unrealistic" at 83 percent by the banks, which were surveyed.
According to the authors of the study, savers, who have less than 100 thousand francs in their account (roughly the amount in dollars) have nothing to fear in the short or medium term, and what is higher than this threshold, the owners of deposits interested in savings only without investing their money, they will be the most vulnerable to negative rates.
In the same context, 83 percent of the institutions surveyed emphasize the need for banks to find other sources of income, adjust their business model, and reduce operating costs.
39 percent of banks have put operational costs down in their priorities, compared to 32 percent in the previous year.
It seems that the confidence in Swiss banks is not rustless, despite the difficulties faced by this sector, but the study revealed that the percentage of clients satisfied with the services of the banking sector is estimated at about 85 percent.
To carry out the study, the company interviewed 100 banking executives, among them the first two banks "UPS" and "Credit Suisse", as well as managers of provincial and regional banks, and private and foreign banks.