STA, 5 February 2020 - Banks have been complaining for years about negative interest rates, which have been eroding their earnings. In some countries they have therefore started charging fees for household sight deposits. In Slovenia, this is unlikely to happen, at least for the vast majority of deposits, shows a central bank analysis.
A survey of commercial banks conducted by the Slovenian central bank shows that at least sight deposits up to EUR 100,000 should be safe from any such measures.
Just one in ten banks involved in the survey said they were considering negative interest and two in ten said they were considering deposit fees, shows the survey presented on Tuesday.
And even if some banks decide to start charging for deposits, the central bank is bullish about the impact this would have on the banking sector.
That is because banks elsewhere in Europe which have already introduced deposit fees have not seen significant outflows of cash, according to vice-governor Primož Dolenc.
And the measure would only affect a small proportion of savers: only 1% of deposits are in excess of EUR 100,000.
What is more, bank clients are slow to react to changed interest rates since real rates are already negative. This implies that some would even accept deposit fees, according to Dolenc.
And even if banks started charging negative interest, most said they would change their policies, meaning they would try to entice clients to convert sight deposits into term deposits.
Bank clients also have few other ways to invest their deposits with the same degree of risk. "Alternative investments would have to be similar to deposits - with high liquidity and low risk," but they do not currently exist, said Dolenc.
This is also why the central bank is not concerned about the impact negative interest might have on bank capital adequacy and liquidity.
"Banks would respond actively, liquidity of the banking sector is reasonably high and access to alternative sources of financing is good at the moment," Dolenc said.
The central bank does not plan on issuing any recommendations to commercial banks regarding negative interest. "Interest rate policy is in the domain of banks," according to Dolenc.