British banks NatWest and Royal Bank of Scotland (RBS) have warned that they may charge businesses to hold deposits, according to news reports.
If they adopt the measure, NatWest and RBS would become the first UK banks to introduce negative interest rates.
Go deeper with GlobalData
In a letter to customers, the banks said: “Global interest rates remain at very low levels…this could result in us charging interest on credit balances.”
The announcement comes a week before the Bank of England is due to set the interest rates.
A spokesperson for RBS, which owns NatWest, told the BBC: “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 of the two banks.”
Interest rates have been held at 0.5% since March 2009 during the financial crisis; however, following Brexit, Bank of England governor Mark Carney has said a fall is likely.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalDataDespite Carney stating that he does not favour interest rates falling lower than 0.25%, some economists believe they will fall below zero, in a bid to dissuade businesses from saving, and encourage borrowing and spending.
The European Central Bank introduced negative interest rates in 2014 to encourage banks to lend money.
