RBS Warns Clients May Face Negative Interest Rates

Tyler Durden's picture

In another reminder that monetary unorthodoxy in the face of NIRP is coming to a savings account near you, overnight the RBS banking group warned 1.3 million customers they could be charged negative interest rates if the Bank of England cuts base rates below zero. The group, which includes NatWest, wrote to its business and commercial account holders about the potential changes, which mean they could lose money even when they are in credit.

As seen in the letter posted below, the bank warned that: "Global interest rates remain at very low levels and in some markets are currently negative. Dependent on future market conditions, this could result in us charging on credit balances."

Source: @camcubed

As Sky reports, RBS and NatWest would be the first banks in UK history to charge negative interest rates. However, a spokeswoman for the group stressed there are no plans to inflict any of these changes on its personal banking customers.

"We will consider any necessary action in the event of the Bank of England base rate falling below zero, but will do our utmost to protect our customers from any impacts," she added.

The spin provided was that any cut in the base rate would be better news for borrowers, as those on so-called "tracker" mortgages would see the cost of their monthly bills fall.

However that will hardly placate already anxious savers who will hardly benefit from the modest decline in mortgage payment and who will soon see returns on their funds slide even more in the event of a reduction to 0.25% as expected and/or be forced to pay their bank should the BOE also go NIRP.

Earlier this month, Bank of England governor Mark Carney said he was reluctant to reduce rates below 0.25%, warning: "If interest rates are too low or negative, the hit to bank profitability could perversely reduce credit availability or even increase its overall price." That may be changing after Bank of England rate-setter Martin Weale said “immediate measures may be needed” to combat a slowdown in the economy following a drop in business sentiment data. Weale’s comments were a surprise coming off his suggestion a week ago that there was “no need for rate cut.”

And while savers may once again be punished as a result of further central bank tinkering, investors are set to benefit that much more as the FTSE 100 - so widely expected to collapse in the aftermath of Brexit by "experts" - FTSE100 continues to soar on even more liquidity generosity courtesy of the BOE.

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philipat's picture

Fuck them. Everyone should immediately start withdrawing cash to send a message before they ban cah.

Looney's picture

 

Forget the “Return On Investment”!

How do you Return Your Investment with Negative Rates?  ;-)

Looney

SomethingSomethingDarkSide's picture

Once these letters go viral, Bank Runs will become household names again.  Don't you worry!

mtl4's picture

After a great party the night before, the only cure for a hangover surely must be to keep drinking.

 

.........just hope to don't run out of alcohol anytime soon.

gmrpeabody's picture

Let me help you with that, mtl4.., it looks a little tight.

MalteseFalcon's picture

Just want to take a moment to inform the banks that if they try to charge people to hold the people's money the people will withdraw it.

The banks will go BK immediately.

The people will then put their paper money into something real that retains value.

Subsequently paper money will crash and the whole game is over.

The WHOLE game.

So take a meeting or two and mull before you implement negative interest rates.

RockySpears's picture

So little of the money in existance is held by the plebs that I suspect the banks would only breathe a sigh of relief  if we took out our cash.

 

Now, if we repaid our debts ...  that would be interesting.

 

Better still ... defaulted.

 

RS

Bollockinell's picture

At the moment they claim NIRP will only apply to commercial clients. Commercial entities rarely, if ever, transact in cash so withdrawal is not really on the cards. Furthermore, if they haven't already done so, they will surely implement capital controls to prevent withdrawals. My own bank has done this by placing a limit of 500 euros/week and preventing bank transfers above 2000 euros without explicit permission of the bank. In the case of the latter, only the bank may effect the transfer. The online option has been disabled.

Failing some alternative currency, outside of central bank control, it appears they have businesses by the balls.

Panic Mode's picture

Long briefcase and mattress

SumTing Wong's picture

If they're charging us to hold balances, they need to fucking pay us for taking out loans. Send me some new credit cards, bitchez. Daddy needs some gold and silver. I also wouldn't mind more ammo to go on the pile.

Joe Sichs Pach's picture

Where's my negative interest rate mortgage?!

NMA's picture

So I take it they will they pay interest on overdrafts!?

Bollockinell's picture

Oh dear, it seems you overlooked the "Heads We Win, Tails You Lose" clause in your contract. ;)

SomethingSomethingDarkSide's picture

I am looking forward to drinking the tears of Passive 401k Investors, don't know about you guys.

micmac's picture

return of your investment

youngman's picture

Shold be good for Gold and silver I would think

TradingIsLifeBrah's picture
TradingIsLifeBrah (not verified) Jul 26, 2016 9:42 AM

More great news for Pension funds I guess

"Long-term returns for U.S. public pensions are expected to drop to the lowest levels ever recorded, portending deeper pain for states and cities as a $1 trillion funding gap widens."

http://www.wsj.com/articles/pension-returns-slump-squeezing-states-and-c...

Bam_Man's picture

Obviously not enough of them own AMZN shares.

Heavy's picture

Less/No Ramirez cartoons please, just thought I'd stick this here randomly...

Sandmann's picture

RBS is the most expensive bank - £45 billion bailout then Fines galore and huge writeoffs plus enormous pay for one Rescue Artist after another - and now top-slicing corporate bank accounts......

The Black Hole that is banking means to suck the light out of the world

 

csmith's picture

Great! I assume it means they'll PAY ME to borrow too!!!

Yukon Cornholius's picture

That type of logic gets you placed in the first class for re-education. It's never 'your' money, it's 'our' money until it becomes their money.

acheron2016's picture

This is what GOLD is for.  Not only will it preserve value but when a country begins a road towards hyperinflation the only storage vessel for wealth is precious metals.  You can play games with the carry trade but when the entire world is simultaneously melting down any fiat play is just a wager on finding a bigger sucker later and not an "investment" at all.

kenny500c's picture

BFD if you are getting no or almost no interest and have to pay fees every month it still means you are losing money and don't even get me started on the effects of inflation on your cash.

SgtSchultz's picture

So remind me again of how a risk free rate can be negative and not blow up a financial model?

PleasedToMeatYou's picture

Mandatory digital "money", coming to a financial system near you.

Next, it's chips.  Not poker, nor potato, but implantable - for your convenience and protection, or course.  Those who object are tin-foil hatters and/or terrorist sympathizers. 

Bryan's picture

I will not participate in any plan to eliminate cash, go completely digital, and implant credit chips under the skin.

Bam_Man's picture

Counterfeit money does not earn interest.

JailBanksters's picture

This isn't a prediction of negative interest rates

nor is it a prediction the banks are going to F you over bad.

 

Like all good zionists, they tell you what they are going to do before they do it,

buy doing that you can't say we didn't warn you.

Bollockinell's picture

Remember in 2013 when they did the Cyprus bail-in, Jeroen Dieselbum came out and said this would be the template for the future of bank debts. Then he retracted his statement and confirmed the IMF position that it was strictly a one-off. Fast forward 8 months and wham!
http://www.europarl.europa.eu/news/en/news-room/20131212IPR30702/Deal-re...

So, to expand on your warning theory, first they warn you while at the same time saying it is extremely unlikely to happen, then they implement it. When the customer screams "BASTARDS!!!" they simply reply "What, didn't you read the letter we sent you a few months back?"

Maybe someone can tell me what the difference is between NIRP and the IMF's proposed savings tax? Both seem the same to me.
http://www.telegraph.co.uk/finance/financialcrisis/10548104/IMF-paper-wa...

And to think that most people still believe the safest place to put their money is in the bank...

JailBanksters's picture

Sounds a lot like they are doing the same again.

The people that expose the Criminal Behaviour of people in power are the bad guys, not the people committing the Crimes.

I guess if they weren't caught out, there would no crime.

In other words it's a Crime to report the Crimes that people commit in Government.

Coldfire's picture

Negative interest? That doesn't sound very interesting. WTF is the matter with this generation of the ruling class, anyway? They are obviously at sea and flailing. And failing. But doubling down on Gladio still won't polish the turd of negative interest rates. That is just retarded.

dumbhandle's picture

Buy crypto, like ethereum.  Extremely high multiyear total return.  Downvote success.

vladiki's picture

Nothing can come right till these ignorant Central Bankers and their imbecile theories go in the trash. Carney doesn't want rates under 0.25% "because that'll hurt banks"; not that they'll cause banks to screw the savers that everything depends on. REAL savings are the fuel that drives an economy. They're achieved by REAL people through REAL work and REAL self denial. But they have to compete with shitty official counterfeit like QE or Helicopter Money! He has rates at 0.25%, well below inflation. He knows that screws savers, but thinks that's OK .. that success depends on more borrowing! It's pitiful, There's supposedly a "savings glut" but they have to counterfeit more. That's phony. He's a bigoted half wit. Rubbish theories like the need for 2% inflation and Wealth Effect belong in fortune cookies not policy documents. There's no science in this. It's a fake religion - a belief system based on threadbare data that denies contrary evidence. They can no more succeed in this than make water run uphill, but they'll keep at it, and the more they try the more harm they'll do and the more likely there will be major and catastrophic resolution.