Bank of Ireland chief executive Francesca McDonagh said on Wednesday that the lender plans to charge small- to medium-sized businesses negative rates on deposits of more than €2.5 million.
The move comes almost a week after it emerged that that the bank had written to 14 large pension firms saying it will charge an interest rate of 0.65 per cent their cash deposits, which average €100 million.
Banks cannot absorb indefinitely the cost of negative rates being charged since 2014 by the European Central Bank (ECB) on excess deposits it accepts from them amid efforts to encourage lending into the economy, Ms McDonagh said in an interview with RTÉ Radio on Wednesday after the bank reported a pre-tax loss of €669 million for the first half amid the Covid-19 crisis.
Ms McDonagh noted that Bank of Ireland had been charging large institutional and corporate customers for deposits since 2016. Deposits placed with the ECB carry a negative of as much as minus 0.5 per cent.
Bank of Ireland does not plan to charge retail customers or small businesses negative interest rates, Ms McDonagh said.
At the start of last month, Ulster Bank began charging negative interest rates on savings over €1 million held by business customers, credit unions and other institutional clients.
Permanent TSB is the only Irish bank that does not charge negative interest rates and chief executive Eamonn Crowley said on Tuesday that he has no plans to introduce them.
