RBS and NatWest could start charging business customers for holding bank deposits if UK base rates fall below zero, a move that would represent the first time negative interest rates are levied in the UK. As David Pollard reports, the news comes amid expectations of a rate cut at next week's Bank of England policy meeting.
They say they have no plans to do it yet. But RBS and NatWest are nonetheless issuing a warning for a time if and when UK base rates fall below zero. If you hold deposits with us, they could incur negative interest rates - which means we, the banks, will charge you for holding your money with us. The warning was issued in a letter to 1.3 million business customers. If in fact, its real target could be Bank of England governor, Mark Carney. (SOUNDBITE) (English) CMC MARKETS, MARKET ANALYST, JASPER LAWLER, SAYING: "The very fact that they're saying it is a shot across the bow. They're trying to warn that they can't cope in this low interest rate environment. And we know just looking at the share prices, the low net interest margins the banks have been reporting, are near record lows. So these low levels of interest are a genuine problem for the sector." And could be about to get worse. The BoE due next week to announce its latest policy decision. Some form of stimulus seen as a real possibility - and even more so after one hawk on its policymaking committee turned dove. Martin Weale now hinting he's behind further easing. (SOUNDBITE) (English) CMC MARKETS, MARKET ANALYST, JASPER LAWLER, SAYING: "What his comments do is increase the chance of some form of stimulus ... This meeting's decision is going to have a big implication as to whether we eventually end up in negative rates. A cut today and I think that makes negative interest rates in the UK very likely." Six of the world's central banks have introduced negative interest rates, and notably the Bank of Japan and the European Central Bank. If state-owned RBS and NatWest, which it owns, were to go ahead with the move, they would potentially become the first British retail banks to do so.