Where exactly do banks create deposits

Negative interest rates cause problems for banks - not all countermeasures are legal

The financial world has been upside down for several years. The European Central Bank (ECB) has lowered the key interest rate for the euro zone into negative territory. Banks that hold funds at the ECB now have to pay interest to the ECB. So deposit money went from a profitable asset to an onerous liability. More and more banks are now trying to pass this burden on to their customers. However, there are numerous legal pitfalls to be aware of.

Negative interest rates are alien to civil law

The obvious option is to burden the customers' deposits with negative interest rates from the ECB. For the Banks these deposits would then be economically neutral. The concept of the German Civil Code (BGB) stands in the way of this possibility. When this was written in the 19th century, negative interest rates were unimaginable. If someone lends money to someone else or gives it in custody, as is the case with current accounts or call money accounts, the law assumes that the borrower has to pay the lender interest. The reverse case, in which the investor also has to pay interest on his borrowed capital, is alien to the BGB.

It is questionable whether it is possible to deviate from this basic legal concept in individual cases. In any case, a negative interest rate adjustment cannot be achieved by a unilateral change in the General terms and conditions (AGB) done by the institutes. The agreement of negative interest turns the basic idea of ​​the law on its head, which would make a corresponding general terms and conditions clause ineffective. The fiction of consent provided for in the general terms and conditions banks, according to which bank customers must object to a proposed change to the general terms and conditions within a certain period of time, otherwise their consent to the change is assumed, should be inadmissible. The customer's right to receive interest on his bank balance would thus be transformed into an interest debt. Logically, the bank would also have to pay interest to its customers if they overdraw their account - assuming negative interest rates were agreed. A business that very few institutes would get involved in.

Beware of creative charges

Many banks are therefore using their bag of tricks. Instead of charging negative interest, they instead increase the fees for their services. Many institutes get creative in the process. In addition to the classic account management fees, there are also fees for withdrawing cash, for individual transfers and even for calling up the online account. But here, too, caution is advised. If fees for ancillary services of the bank are agreed in the general terms and conditions, these are subject to content control by the courts. According to the case law of the Federal Court of Justice (BGH), such fees may not disadvantage the customer inappropriately. In principle, they must also be based on the institute's costs for the corresponding service. The bank must provide evidence of the actual costs. Such fees are therefore only of limited use as an additional source of income to offset negative interest rates.

Credit institutions sit between the hammer of negative interest rates and the anvil of the consumer-friendly case law of the BGH. The legal options for banks to pass the negative interest charges on to customers must therefore be carefully examined. Our banking law team will be happy to provide your institute with advice and assistance. We would be happy to work with you to explore the possibilities of new sources of remuneration and the permissibility of passing on negative interest charges. contact us under [email protected] or under +49 (0)69 76 75 77 80.

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Dr. Annette Wagemann

Dr. Annette Wagemann is a specialist lawyer for banking and capital markets law and advises companies and their managers on all aspects of commercial law. At WINHELLER she specializes in the legal structuring of business models, corporate governance and compliance.

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