The chief executive of AIB has confirmed that the bank will be extending negative interest rates to all customers with deposits in excess of €1 million from later this year.
At the moment, AIB levies negative interest rates on personal customer deposits in excess of €3 million and on business customers with deposits greater than €1 million.
“We are aligning those thresholds from October onwards,” Colin Hunt told analysts on an investor call following the publication of the bank’s half year results.
Banks have been charged for placing excess cash on deposit with the European Central Bank for many years.
Negative rates were first introduced by the European Central Bank in 2014.
Its deposit rate is currently -0.5%.
The policy of negative rates was introduced by the ECB to encourage banks to lend more in order to boost the economy.
Most Irish banks initially held off passing that cost onto customers, but in recent years they’ve started to levy it on corporate customers in particular.
Bank of Ireland has been writing to customers informing them that all depositors – personal and business – will also be charged negative rates on deposits in excess of €1 million.
Many households have been accumulating excess savings since the onset of the pandemic driving deposits to a record high of €132 billion by the end of June, according to the Central Bank.
The rate of growth in deposits has slowed down significantly in tandem with the reopening of the economy as Covid restrictions continue to the lifted.
Mr Hunt wouldn’t be drawn on whether AIB was looking at making more acquisitions beyond the deal to acquire Goodbody stockbrokers, the purchase of part of Ulster Bank’s loan book and the agreement to form a joint venture with Canada Life.
There have been reports that the bank was in talks to acquire Ulster Bank’s tracker loan book as well as the over €4 billion of corporate and business loans that it’s agreed to buy from the lender as it prepares to exit the market here.
The AIB CEO said the focus was on integrating those businesses into its own operations but that the bank remained ‘alert to opportunities’.
He said the bank was aware of the market speculation but that he would not comment on it.
Article Source – AIB extending negative rates to all deposits over €1m from October – RTE – Brian Finn