High street UK banks pave way for introduction of negative interest rates

Headlines crossed the wires earlier on the day that a couple of high street banks in the UK are now warning of imposing negative rates to their customers.

Royal Bank of Scotland (RBS) letter to customers:

"Global interest rates remain at very low levels... this could result in us charging interest on credit balances"

"We will consider any necessary action in the event of the Bank of England base rate falling below zero, but will do our utmost to protect our customers from any impacts"

While NatWest also warned business customers it may have to charge to accept deposits but says it has no plans to do so for personal accounts. As reported by the Guardian, “It could mean that an account holder with £1,000 in a NatWest account could see that shrink to £999 or less the following year as the bank charges a negative rate of interest.”

NatWest noted the following in its letter to customers:

“Global interest rates remain at very low levels and in some markets are currently negative. Dependent on future market conditions, this could result in us charging interest on credit balances.”