Stadtsparkasse München is the first large savings bank to take drastic measures to defend itself against the negative interest rates of the ECB.

Clearing out the savings banks: savings contracts are terminated.

Dhe Stadtsparkasse München terminates 28,000 premium savings contracts. The fifth largest savings bank in Germany justifies this with the costs of negative interest rates from the European Central Bank (ECB).

In addition, Münchner Sparkasse reserves the right to demand penalty interest from new customers with a credit balance of more than 100,000 euros on their current or cash account from October 1st. This is intended to ward off an influx of deposits.

Because for excess funds that are invested at the ECB, the banks have to pay a deposit rate of minus 0.5 percent. Stadtsparkasse München is so far the largest savings bank that is trying to take tough measures to mitigate the effects of negative interest rates.

Terminations in Nuremberg

In Bavaria, the Nürnberger Sparkasse last canceled 21,000 premium savings contracts in July. These are savings contracts without a fixed term that have reached the maximum interest rate after 15 years.

It was only in May that the Federal Court of Justice (BGH) gave the green light to terminate premium savings contracts. According to the judgment, long-term premium savers can terminate their old contracts if they have exhausted the bonus scale that has been agreed. In the case, customers of the Kreissparkasse Stendal in Saxony-Anhalt had sued, the three corresponding contracts from the years 1996 and 2004wanted to continue.

Stadtsparkasse München justifies its terminations with the deposit rate that the ECB has lowered from minus 0.4 to minus 0.5 percent. Since this is negative, it amounts to a penalty interest rate because the banks have to pay for their funds deposited with the ECB. However, the ECB is trying to alleviate the burdens with a graduated interest rate. The banks have an allowance that they can park for free at the ECB.

Profit situation under pressure

Münchner Sparkasse has a total of 800,000 customers. Savings banks, like Volksbanks and Raiffeisenbanks, live, among other things, from the interest spread between lower deposit ratesand higher lending rates. Due to the extremely loose monetary policy, this spread continues to shrink, which has a negative impact on earnings.

According to the Munich savings bank bosses, the previous austerity measures are no longer sufficient. So far, the Sparkasse has found “different ways” to compensate for the falling income.

But now there are penalties for wealthy new customers in the room – an announcement that the Münchner Sparkasse describes as a necessary precautionary measure. “This regulation does not affect customers with existing accounts,” the municipal bankers try to reassure their customers.