UBS to charge super-rich for cash deposits

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UBS UBS to charge super-rich for cash deposits

Move means savings of £1.7m would attract fee of £10,700 for clients in Switzerland

UBS holds £1.9tn on behalf of many of the world’s richest people. The Swiss franc is a safe-haven currency. Photograph: Ruben Sprich/Reuters

Swiss banks are to start charging their super-rich clients to look after their piles of cash.

UBS, the world’s largest wealth manager, told its ultra-wealthy clients on Tuesday that it would introduce an annual 0.6% charge on cash savings of more than €500,000 (£461,000). The fee, to be introduced in November, rises to 0.75% on savings of more than 2m Swiss francs (£1.7m).

The minimum fee is €3,000 a year. Savings of 2m francs would attract an annual charge of 15,000 francs.

The 157-year-old bank, which holds $2.3tn (£1.9tn) on behalf of many of the world’s richest people, said it was introducing the fee to pass on the cost of negative interest rates set by the Swiss National Bank and the European Central Bank (ECB). The SNB interest rate is -0.75% and economists polled by Reuters said they expected it to stay in negative territory until at least 2021.

“Conditions in money and capital markets remain very challenging,” UBS said. “Interest rates are lower than expected, remaining in negative territory. We assume that this period of low interest rates will last even longer and that banks will continue to have to pay negative interest rates on customer deposits at central banks.

“Following similar moves by a number of other banks here in Switzerland, we confirm that we’ve decided to adjust cash deposit fees for Swiss francs held in Switzerland. Beginning 1 November, private individuals holding large CHF cash balances (above CHF 2m) with UBS Switzerland will be charged a deposit fee (0.75%).”

UBS recently advised its clients that the SNB might lower its rate on deposits to -1% in September. The ECB deposit rate is -0.4%. The US Federal Reserve cut rates for the first time in a decade last week, reducing its benchmark interest rate by one-quarter of a percentage point to a range of 2%-2.25%.

The Swiss franc reached its highest level against the pound on Monday as investors bought the safe-haven currency following the escalation of trade tensions between the US and China. One Swiss franc was worth 85p on Monday, falling to 84p on Tuesday. It also hit a two-year high against the euro, with one Swiss franc worth €0.92.

Credit Suisse, Switzerland’s second-largest bank, said last week that it would charge its clients 0.4% on savings above €1m from September. The smaller private Swiss banks Julius Baer and Pictet already charge some rich clients for large cash deposits.

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UBS has been positioning itself to attract more of the savings of the global super-rich as they seek out the stability and privacy of Switzerland’s banks at a time of growing financial instability across the world.

The bank employs 23,600 people in its global wealth management division “to provide tailored investment advice and solutions to private clients, in particular in the ultra-high net worth and high net worth segments”.

The world’s 500 wealthiest people lost 2.1% of their collective net worth on Monday, as US stock markets had their biggest one-day drop this year. The richest person in the world, Amazon’s Jeff Bezos, swallowed the biggest paper loss with his fortune falling by $3.4bn, taking it down to $110bn. Twenty-one people on Bloomberg’s billionaires index lost more than $1bn each.

Hong Kong’s wealthy are also nursing big losses after weeks of protests and strikes that started over a controversial extradition law, which would have allowed the transfer of suspects to mainland China. The fortunes of the 10 richest people in Hong Kong have fallen by $19bn since 23 July. The paper wealth of its richest man, Li Ka-shing, has dropped by about $2.7bn, or 9%.

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