HSBC Says Rock-Bottom Interest Rates May Curb Free Bank Accounts
(Bloomberg) -- HSBC Holdings Plc has warned that some of its free banking services may become a thing of the past.
Europe’s largest lender could start charging for basic banking services “in some markets” because low interest rates meant they were losing money, Chief Financial Officer Ewen Stevenson said on a call with reporters Tuesday after the bank reported third-quarter earnings.
Such a change would be the latest example of how years of rock-bottom interest rates are eroding some of the traditional dynamics of finance. In Europe, a half-decade experiment with subzero rates has put pressure on lending revenue and burdened banks with billions of euros in penalties for parking cash with the central bank.
UBS Group AG and Credit Suisse Group AG already charge some customers for holding cash, while many European lenders are pushing clients to use more investment products rather than deposits. Barclays Plc Chief Executive Officer Jes Staley said Friday that his bank may levy fees if the Bank of England ever implements negative rates.
“We would rather not charge our clients those negative interest rates but we also have to manage the financial integrity of the bank,” he told Bloomberg Television.
With the coronavirus pandemic sparking a global downturn, there’s little chance of a rise in rates anytime soon, and more lenders could start charging for currently free services.
Still, at least some customers can rest easy.
“Whatever happens with negative interest rates, HSBC UK is committed to continuing to provide basic bank accounts with fee-free standard operations,” the London-based lender said in a statement.
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