In Denmark, the central bank began setting negative rates in 2012, and for wealthy Danes, it’s been a chore to avoid giving money to the banks ever since. There are 178,000 Danes with more than 750,000 crowns in the bank, and they have been moving money to separate accounts, or simply taking it out of the bank altogether ever since negative rates were instituted.
Who wants to pay the bank to hold their money? No one, of course.
Last week I detailed for you the growing trend of wealthy individuals using safety deposit boxes. A safety deposit box has many benefits besides moving your money out of an insecure home and into a highly secure bank vault. Putting your money in a safety deposit box can also help wealthy savers in countries with negative rates avoid paying those rates to have their money kept in the bank. Storage fees apply, but depending on the amount of money you have, it could be much cheaper to leave it in a safety deposit box. It also could be less complicated than opening multiple small accounts.
In Reuters, Jacob Gronholt-Pedersen and Nikolaj Skydsgaard explain the lengths wealthy Danes are going to in their efforts to avoid negative rates:
Last month, a survey of wealthy individuals indicated that only 8% of respondents would accept paying interest rates on their private deposits. The remaining 92% want to pull their money out of deposits and put it elsewhere.
Of those, 7% percent said they would take out cash and keep it at home or in a deposit box at the bank.
“Danes seem to like the security of having large amounts of money in the bank,” said Nykredit analyst Mira Lie Nielsen. “The growing focus on the consequences of excess consumption for the climate and the environment may have begun to make Danes more reluctant to spend.”
Jyske Bank, Denmark’s second-largest bank, was the first Danish bank to announce negative rates on wealthy client deposits, in August, with roughly 11,000 clients due to be affected as of Dec 1.
It was also the first to offer a negative rate on a home loan, in effect paying customers 0.5% to borrow money for 10 years.
The move was followed by a wave of announcements from other banks, including Nordea (NDAFI.HE) last week, to begin charging wealthy individuals for their deposits of more than 750,000 crowns.
Read more here.
