The interest rate hike announced by the ECB is causing financial institutions to rethink. “Custody fees” for high balances in the bank account could soon be a thing of the past for many customers.

Bank customers in Germany can hope for an end to the negative interest rates on current and overnight accounts as part of the interest rate hike announced by the European Central Bank (ECB) for July.

“The amount of the custody fee is based on the so-called deposit facility of the European Central Bank. If the ECB raises the deposit facility rate by 0.25 percentage points in accordance with its recent announcement in July, Deutsche Bank and Postbank will pass this adjustment on to their retail customers and reduce the custody fee by 0.25 percentage points in the short term,” announced a spokesman for the largest German financial institution on Monday.

The Governing Council of the ECB decided on Thursday to raise key interest rates in the euro area by 0.25 percentage points at its next meeting on July 21. In September, a “larger interest rate step” is then possible. Banks currently have to pay 0.5 percent interest when they park funds at the ECB. A number of institutes pass the costs on to their customers.

Complete waiver planned from October

“If the deposit facility rate is raised to zero or positive in a second step, we will no longer charge a custody fee in retail banking,” said the Deutsche Bank spokesman. “The ECB’s second step is expected in September, so Deutsche Bank and Postbank are expected to completely waive the custody fee for their private customers in October.”

Since mid-May 2020, Deutsche Bank has been charging so-called custody fees in its private customer business. Currently, customers there have to pay negative interest from 50,000 euros on current and investment accounts and from 25,000 euros for overnight money. It is the same with Postbank, which belongs to the Deutsche Bank Group.

Commerzbank still does not specify when it will reduce its custody fees for customers with large deposits. The bank is waiting for the next ECB decisions, said a spokesman for the Frankfurt institute on Monday when asked. Commerzbank boss Manfred Knof said in mid-May: “If the ECB reacts, then we can and will react quickly.”

The direct bank ING Germany pushed ahead on May 10 and had committed to abolishing negative interest rates for almost all of its private customers by July 1. According to the comparison portal Verivox, at least 451 of the approximately 1,300 banks evaluated in Germany are currently demanding negative interest rates from private customers (as of June 8, 2022). The Internet portal Biallo even counts 582 banks and savings banks that collect negative interest from private customers (as of June 9, 2022).