Ireland - Banks are charging credit unions as much as 65 basis points to keep their money on deposit meaning, for example, a credit union would pay €6,500 for every €1 million it has on deposit.
DUBLIN, Ireland–At least three-dozen credit unions in
Ireland have imposed a limit on the deposits members can have, in some cases as
low as €15,000, as a result of negative interest rates now in place at the
country’s two largest banks.
Ireland
The Irish Times reported it has identified 36 credit unions
that have imposed the caps in order to limit any surplus funds they keep on
deposit with the banks.
One of the banks, AIB, is charging corporate customers as
much as 65 basis points to keep their money on deposit, the Irish Times
reported, meaning, for example, a credit union would pay €6,500 for every €1
million it has on deposit.
A spokesman for the bank told the Irish Times it has tried
to insulate “the vast majority of our customers from the impact of a sustained
period of negative interest rates” but that there were “a relatively small
number of larger depositors with whom AIB seeks to reflect the commercial
realities of the negative interest rate environment.”
Bank of Ireland is reportedly charging depositors as much as
40 basis points (or a negative rate of 0.4 percent) on short-term deposits,
the publication reported.
Credit unions are also blaming the Central Bank–which
regulates credit unions in Ireland–for rules they say cut the amount of savings
they can accept from members, arguing that for every €100 saved in the credit
union, they have to set aside €10 as part of the regulator’s capital
requirements.
Savings hit € 13.2 billion in March of this year, up 20% on
2008, while at the same time demand for lending has shrunk, the Irish Times
reported. The Irish League of Credit Unions said loan dollars outstanding had
declined from €6.4 billion in 2008 to €4.3 billion as of March this year.
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