Uber bank Credit Suisse Group (NYSE: CS) said today that it would begin charging customers a negative interest rate on deposits of Swiss francs beginning on December 10th. The bank did not say what holding deposits of the Swissie would cost, but we do have a yardstick.
Earlier this year, both State Street Corp. (NYSE: STT) and Bank of New York Mellon Corp. (NYSE: BK) began charging customers to hold Swiss francs. State Street charges 0.25% and Bank of New York charged a fee of 0.13% on U.S. dollar accounts. Bank of New York later imposed a fee for deposits of Swiss francs and Danish kroner, and State Street also added a fee for the Danish currency.
The move makes sense because it does cost the banks something to hold all that cash. In fact, the FT Alphaville blog cites anecdotal evidence that bonded warehouses in Geneva are “being scouted out for banknote storage.” If banks are looking for warehouses to stack up franc notes, it only makes sense that their customers should pay for the privilege of storing the piles of paper.
The Swiss franc trades at around $1.21 to the euro, slightly above the $1.20 floor that the Swiss National Bank has been defending for the past year or so.