Since January last year, the Swiss National Bank has kept
interest rates in negative territory in an effort to discourage
investors from holding the Swiss franc, whose strength hits
So far, only one of Switzerland's 260-odd banks has passed on
negative rates to retail clients and Thomas Gottstein, chief
executive of Credit Suisse's Swiss Universal Bank, said banks
could live with sub-zero rates for the moment.
However, Gottstein cautioned that negative rates are already
weighing on banks' savings and deposits businesses and this
could end up attracting other competitors which do not hold
significant liabilities in Swiss francs, such as foreign banks,
into the market.
"In the medium and long term, that is not a stable state of
affairs," Gottstein told reporters at a presentation of Credit
Suisse's economic forecasts for the Swiss economy.
The SNB last week kept its target range for three-month Libor at
-1.25 to –0.25 percent while maintaining its interest rate on
cash deposits at -0.75 percent.
Negative rates and currency intervention have been the
cornerstone of the SNB's strategy to weaken demand for the franc
since it scrapped its cap against the euro in January 2015.
The negative rates have caused unease in Switzerland by acting
as a charge on banks, while insurers and pension funds have
wrestled with low bond yields.
(Reporting by Joshua Franklin; editing by Jason Neely)
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