Switzerland: cash in a box is better than in a bank

The negative rates of Switzerland (-0.75%), forced down by the Central Bank to protect the franc from dangerous flare-ups against major currencies, are keeping many customers away from banks.

As Helvetia Ag told Bloomberg, keeping the cash in a box at home or at the company, costs, for each million, 1000 francs insurance, instead of one million Swiss francs in the current account has maintained an average annual cost of 7,500 francs for the customers. But the sum doesn't include the costs of logistics or security sistems.

UBS and Credit Suisse, along with other major banking groups, have poured already part of the costs of negative rates on wealthier clients liquidity such as asset managers and large corporations.

Next week the Swiss central bank will meet for an update of the monetary policy. Analysts expect the SNB to leave rates on hold at 0.75% (the lowest point between the world's central banks), despite the protests of a part of the economic reality of the country.

"Negative rates are the dominant theme in Switzerland", commented Markus Gygax, CEO of Valiant Holding AG, a retail bank. "As long as the interest rate on the credit will continue to fall, it remains a big problem for us."

The chief executive of UBS, Sergio Ermotti, sounded the alarm a few months ago, saying that negative interest rates encourage risky lending practices among some banks, potentially a threat to the financial system. The manager then called the current account as a source of "loss-making proposition". In the uproar that followed Ermotti warning that it would be compelled to pay negative rates to richer customers and increase interest on loans if the situation persists.

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