DUBLIN: AIB has decided to extend negative interest rates to all customers with deposits in excess of €1 million from October. Currently, the bank charges negative interest rates on personal deposits in excess of €3 million and on business deposits in excess of €1 million.
Negative interest rates were first introduced by the European Central Bank in 2014 to encourage banks to lend more in order to stimulate economic growth. The ECB’s deposit rate is currently -0.5 percent.
Most Irish banks initially avoided charging negative rates to customers, but in recent years, they have started to do so, particularly with corporate customers. Bank of Ireland has informed its customers that all deposits in excess of €1 million would be subject to negative interest rates.
According to the Central Bank’s analysis, many households have been accumulating excess savings since the beginning of the pandemic, with deposits reaching a record high of €132 billion by the end of June. The bank said that the rate of deposit growth has slowed significantly in parallel with the economy’s recovery as COVID-19 restrictions continue to be eased in the nation.
According to reports, the AIB was in talks to acquire Ulster Bank’s tracker loan book as well as over €4 billion in corporate and business loans as it prepares to exit the market in Republic.
Colin Hunt, AIB’s CEO, said that the company’s priority was to integrate such businesses into its own operations. Mr Hunt also said the bank was aware of the market speculation.
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