PTSB to pass on negative rates to 200 corporate depositors

Permanent TSB (PTSB) has written to about 200 corporate depositors, including credit unions, insurers, large companies and public bodies, to tell them that it plans to apply negative interest rates to them.

PTSB is the last retail bank in the Republic to start charging negative rates, which the European Central Bank has been imposing on excess deposits placed with it since 2014 as part of a monetary policy to encourage lending rather than saving in the economy.

Confirming the development, a spokeswoman for the bank said that it has “no plans to introduce negative interest rates for over 99 per cent of our customers – personal, small and medium business or charities”.

“However, we do have a very small number of corporate customers including; financial institutions, public bodies and large companies, who have money on deposit with us through our corporate/treasury desk,” she said.

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“From the 1st December 2021 we will begin to introduce negative rates for this small group of corporate customers on expiry of their current fixed term deposit, as it is not appropriate that a personal and small business bank would continue to cover the cost of negative interest rates for other financial institutions, public bodies or large institutions.”

Sources say that €450 million of deposits will ultimately be affected by the move.

Deposits

The ECB deposit rate currently stands at minus 0.5 per cent, a rate that AIB is currently charging as it continues to roll out a policy this year of imposing negative rates on customers with more than €1 million on deposit with the bank. Bank of Ireland's negative rate on deposits in excess of that threshold stands at 0.65 per cent.

The PTSB spokeswoman declined to comment on the bank’s planned rate.

Still, the bank has good reason not to follow its larger peers in extending a negative rates policy more widely.

While PTSB’s €18.9 billion deposits book at the end of September was €4 billion larger than its loan portfolio, it will need to attract additional deposits over the near term to help fund its planned acquisition of €7.6 billion of mortgage and small business loans from Ulster Bank, which is exiting the Irish market.