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The thing is that the bank is still doing OK out of this (as is the customer obviously). Banks have the ability to raise capital. Then they can do something w
by adaml_623 12y ago
The thing is that the bank is still doing OK out of this (as is the customer obviously).
Banks have the ability to raise capital. Then they can do something with the capital or they can leave it in the bank, in this case the central bank, who would give them negative interest. If they lend it to a customer who buys a house then they will get slightly better return on their capital with that customer (Trying to avoid the term "a less bad return").
As long as it's a temporary thing then the banks will ride it out and the customers will remember it fondly.
- URSpider94 12y agoMost banks raise capital by holding deposits from customers. If the bank now tells me that it's going to charge me -1% for my savings account, I'm going to pull that money out and keep it in a safe. Think about how aggressively banks compete on "no fee" accounts, and how aggressive customers are about moving their money to avoid fees. Mint, for example, practically sounds an alarm on my phone whenever I get charged a bank fee.
- thaumasiotes 12y agoYou might think twice about the safe if you had to keep, say, $800,000 in there.
- URSpider94 12y ago1% of $800,000 is $8,000. I can rent multiple large safe deposit boxes in that same bank, with plenty of room for 8,000 $100 bills, for a few hundred $ per year.