State Street Corp. and Bank of New York Mellon Corp., two of theworld's biggest custody banks, will charge depositors to holdDanish kroner and Swiss francs as customers seek refuge from thecrisis-stricken euro.

State Street will apply a negative interest rate of 0.75 percentannually to krone deposits starting Nov. 1, with a separate chargefor francs, according to a note to clients last week. That meansmoney managers, insurance companies and pension funds must pay thebank to hold their cash. BNY Mellon started charging for kronedeposits last month, a person with knowledge of the matter said.The lender isn't charging for francs.

Denmark and Switzerland have cut interest rates close to orbelow zero to keep the krone and franc from rising as investorsflee the euro for safer havens, reflecting concern that thecurrency may break up. While negative rates may drive off somecustomers, global lenders want to restore the profit margin betweenwhat they pay for deposits and what they earn on investments.

Complete your profile to continue reading and get FREE access to Treasury & Risk, part of your ALM digital membership.

  • Critical Treasury & Risk information including in-depth analysis of treasury and finance best practices, case studies with corporate innovators, informative newsletters, educational webcasts and videos, and resources from industry leaders.
  • Exclusive discounts on ALM and Treasury & Risk events.
  • Access to other award-winning ALM websites including PropertyCasualty360.com and Law.com.
NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.