Royal Bank of Scotland and Natwest have told businesses that they may be charged while accepting deposits in view of the low interest rates. The two may be the first UK banks to introduce negative interest rates. This will mean that the businesses would be charged if the y make deposits in the banks. The banks wrote to its customers that global interest rates remain at very low levels… this could result in us charging interest on credit balances. Personal customers would not be affected. An RBS spokesperson said the letter was sent to just under 1.3 million of the combined business and commercial customers of the two banks. The communication said the banks would consider any necessary action in the event of the Bank of England base rate falling below zero, but will do their utmost to protect their customers from any impacts. UK interest rates have been unchanged since the Bank of England cut them to a record low of 0.5% in March 2009 at the height of the financial crisis. When the rate goes below zero, the normal relationship between banks and customers is reversed. Instead of the lender getting paid interest by the bank for allowing it to use their money, the lender has to pay the bank for holding their money. In 2014, the European Central Bank was the first major central bank to introduce negative interest rates, with the aim of encouraging banks to lend to businesses rather than hold on to money.
