RBS share price: Group may charge firms to hold deposits

on Jul 26, 2016
Updated: Oct 21, 2019

Royal Bank of Scotland Group’s (LON:RBS) Natwest and RBS units have warned businesses that they may have to charge them to accept deposits, the BBC has reported. The move has been prompted by the current low interest rate environment, with the Bank of England expected to trim rates further in the wake of the Brexit vote in last month’s referendum.

RBS’ share price added 0.58 percent to close at 190.50p yesterday, outperforming the benchmark FTSE 100 index, which ended the session 0.30 percent lower at 6,710.13. This morning, the shares have slipped into the red, having lost 0.47 percent to 189.60p as of 08:02 BST, as compared with a 0.34-percent gain in the Footsie.
The BBC reported yesterday that Natwest and RBS had warned businesses they may have to charge them to accept deposits due to low interest rates. The move, if enacted, would make them the first UK banks to introduce negative interest rates.

“Global interest rates remain at very low levels […] this could result in us charging interest on credit balances,” the banks wrote in a letter to customers. “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.”
A spokesman for the bailed-out lender told the BBC that the letter was sent to just under 1.3 million of the combined business and commercial customers of the two banks. Personal accounts, however, will not be affected by the move.
In analyst ratings, BNP Paribas reiterated its ‘neutral’ stance on RBS last week, with a price target of 200p on the shares, while Deutsche Bank continues to see the bailed-out lender as a ‘hold’, valuing the stock at 200p. RBS is scheduled to update investors on its interim performance on August 5, while bailed-out peer Lloyds Banking Group (LON:LLOY) reports this Thursday.
As of 08:12 BST, Tuesday, 26 July, Royal Bank of Scotland Group share price is 190.50p.