UBS and CS sting on savings rate

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The Swiss National Bank (SNB) needs banks to implement its monetary policy. Financial institutions get paid well for this. Monetary policy has an impact on the economy only if banks’ demand deposits earn interest at the base rate of the SNB. And so it can contribute to lower inflation in Switzerland again.

The SNB’s base rate is currently 1.5 percent and will likely go higher in June. Monetary policy expert Adriel Jost (37) talks about a kind of “bonus payment” for banks in “NZZ am Sonntag”.

Billions of blessings for banks

That’s because while banks are honorably rewarded for their monetary policy help, savers are staring at it and getting a much lower interest rate on the money in the bank account. Banks “do not have to provide any direct provision for additional income. Therefore, the payment is based on the privileged position in the capital market that the banks have thanks to their banking licenses,” says Jost.

According to one estimate by Jost, banks could collect at least CHF 7 billion from SNB this year. About 1.5 to 2 billion Swiss francs of this can only flow into the two big banks, UBS and Credit Suisse. “Theoretically, in perfect competition, banks would pass all of this income to their customers – so the savers would be the beneficiaries of the SNB funds,” the economist explains. “In practice, however, institutions tend to use the additional revenue to improve their margins.”

UBS and CS charge low

Especially as the competition could dwindle further with the takeover of CS by UBS. Comparing conditions by the comparison service Moneyland featured in the paper, the two are among the biggest losses when it comes to savings interest.

For example, if you have 50,000 francs in your Glarner Kantonalbank account, you will receive 1,562 francs in interest over two years. CS has 751 francs for it, and UBS only has 501 francs for it. Another systemically important bank performs worst: ZKB pays only 355 francs on the money.

Not only are the stingy the big ones when it comes to savings interest, traditional accounts at UBS and CS are accounts payable most of the time. Money that further reduces interest income. What it helps: Compare the terms exactly and sometimes deposit the money in a bank that offers better interest rates and charges lower fees. (co)

Source :Blick