Bank of Cyprus starts charging Liquidty Fee of 0.5% per month!?!?!

JimBeam

Building Trust
Entrepreneur
Looks like BoC will charge 0.5% per month to all accounts for "Liquidity Fee" starting March 1st 2020:

It's like 6% / year! This is so wrong!



More detials:

Bank of Cyprus Public Company Ltd is going to apply new fee on credit balances of Euro deposits and reduct the Euro interest rates.

"Bank of Cyprus Public Company Ltd (the ‘Bank’) would like to inform you that, given the current market conditions and as a result of the prevailing negative interest rates in Euro, the Bank has no option but to introduce charges on deposit accounts for a limited number of customers. As a result, the Bank will proceed with the following revisions with regards to your EUR accounts, with effective date 01/03/2020:

Α) Introduction of a new fee to your EUR accounts maintained with the Bank.

The attached Table indicates the new fee (‘Liquidity Fee’) to be charged, based on the type and the tenor of the deposit. The Table is also uploaded to our website, www.bankofcyprus.com, and is available at the Bank’s Branches.

Β) Reduction of the EUR credit interest rates to 0% for the following types of EUR accounts maintained with the Bank.

  • Current accounts, Savings accounts, Instant Access and Sight accounts
  • Notice accounts
  • Fixed Deposits
The aforementioned revisions reflect the cost incurred by the Bank, as a result of the negative interest rates prevailing in the international markets.

The following apply with respect to the implementation of the aforementioned revisions:

Regarding your Payment Accounts

Payment Accounts are defined as follows:

- Current accounts, with or without limit

- Savings Accounts

- Credit Card Accounts

- Notice Accounts (allowing for payment transactions without restrictions, as per their terms of use) 2

Should you disagree with the upcoming Liquidity Fee as described in the attached Table, and/or the reduction in credit interest rates, you have the right, prior to 01/03/2020, to inform the Bank accordingly and terminate any Payment Accounts that you maintain with the Bank. In such a case, no charge will apply in relation to the termination of your Payment Accounts. If by 01/03/2020 you do not inform the Bank that you intend to terminate your Payment Accounts held with the Bank, it shall be deemed that you agree with the implementation of the above fee as well as the reduction in the credit interest rates, as mentioned above.

Regarding your other accounts

It is noted that for fixed deposit accounts, the new fee and the reduction of the interest rates will be effective upon the renewal of the fixed deposit, whereby such renewal will be on or after the 01/03/2020.

In case you do not agree with the upcoming fee, as described in the Table attached, and/or the reduction of the interest rates with regards to accounts other than Payment Accounts (e.g. fixed deposits), you have the right not to renew such account(s) and/or terminate same. Should you wish to terminate such account(s) prior to their maturity, you may be charged as per the current Table of Commissions and Charges and/or as per your agreements with the Bank pertaining to these accounts.

For more information, and/or alternative product options, please contact your Accounts Officer (xxxxx, telephone number: xxxxx) or any Bank of Cyprus Branch."

Source: Bank of Cyprus Public Company


Source:
 

maxmmm

Building Trust
Entrepreneur
Exchange your EUR to USD et voila (random chars to reach 50 characters)
 

JimBeam

Building Trust
Entrepreneur
Not a bad idea, but I wonder what would be the costs of this action (from EUR to USD and back).

"We have noticed that you maintain large amount in the Euro account. We would like to recommend to you the available options. One option is to invest through our Private Banking and Wealth Management."
 

Martin Everson

HNWI Offshore Consultant
Business Angel
Mentor Group
It's like 6% / year! This is so wrong!
The (*) in document shows the 0.5% is being charged on an annual basis. So basically they are passing on the ECB's charge of -0.5% they pay to keep your cash at ECB. Nothing wrong with that. BoC can no longer support paying the negative fee for its customers and just passed it on.

Remember UBS did the same to me with the -0.75% they passed on which would mean I pay 15,000 CHF a year just to keep 2m in CHF. And people thought I was crazy taking cash from Switzerland after they announced this :rolleyes:.

Anyway all banks and EMI's will have no choice but to pass on negative EUR and CHF rates to customers sooner rather than later.
 

JimBeam

Building Trust
Entrepreneur
"I refer to you to inform you about the Liquidity Fee which our Bank is been charged for the extra liquidity deposited to the Central European Bank in Euro currency. The Bank is paying 0.65%. The Bank has decided to remove part of the Liquidity fee, 0.5%, currently to Holding Companies, starting on the 01/03/2020. But most probably the Bank will apply this fee to all clients."

So it 0.65% but they'll pass 0.5% to the clients.

I figured this is annual rate, but in my phone call with the bank they told me it's monthly.... so that got me worried as that's insanely expensive.

@Martin Everson
Also, they offer their services of investing trough their Private Banking / Wealth Management in order to avoid these fees.
Do you have any advice on that ?
 

Martin Everson

HNWI Offshore Consultant
Business Angel
Mentor Group
The Bank is paying 0.65%.
That's a lie they told you unless I missed something. See for yourself below. They must store your money with a thirdparty and not ECB then and are paying a markup...lol.

Official interest rates

Also, they offer their services of investing trough their Private Banking / Wealth Management in order to avoid these fees.
Do you have any advice on that ?
Avoid like the plague. Euro currency yields nothing. Hence any safe investment will yield nothing right now. Just look at returns on any Euro Money Market cash fund they are all negative i.e -0.5% or worse when you add product fees. There is no magic wond when it comes to Euro's right now unless you up your risk level with a risky private banking product.
 

JimBeam

Building Trust
Entrepreneur
Avoid like the plague. Euro currency yields nothing. Hence any safe investment will yield nothing right now. Just look at returns on any Euro Money Market cash fund they are all negative i.e -0.5% or worse when you add product fees. There is no magic wond when it comes to Euro's right now unless you up your risk level with a risky private banking product.
Makes sense. Thank you for your input.

Can something like that happen to USD deposits soon?
 

Admin

Forum Moderator
Staff member
It's the same with all other banks in Europe, things are not the same as they were used to be and they will never be like this again. Today you will have to pay for the money you have in your account.

Better to pick an alternative like USD, EFT's or simply stash it in Gold a safe place.
 

Martin Everson

HNWI Offshore Consultant
Business Angel
Mentor Group
Can something like that happen to USD deposits soon?
Yes. Trump has said he wants to see USD negative interest rate. US rates have also been slowly creeping down towards zero also :oops:




You also need to consider that switching from Euros to USD for maybe a 1-2% yield in the Money Markets/deposits is pointless. You can lose twice that gain over time in the exchange rate loss/market movement between dollar and euro when switching back to spend :(.
 

Martin Everson

HNWI Offshore Consultant
Business Angel
Mentor Group
Btw I can see by the posts that the goal of negative interest rates that ECB set out to create is working 100%. It is forcing people to have to invest their money or find something to buy which keeps the money circulating. By moving the ability to park money and have idle cash at the bank they are stimulating the Eurozone and forcing money into the economy smi(&%
 

JimBeam

Building Trust
Entrepreneur
You also need to consider that switching from Euros to USD for maybe a 1-2% yield in the Money Markets/deposits is pointless. You can lose twice that gain over time in the exchange rate loss/market movement between dollar and euro when switching back to spend :(.
Yes, clearly this is not an option (as BoC exchange fees would be much bigger than 0.5%).


Btw I can see by the posts that the goal of negative interest rates that ECB set out to create is working 100%. It is forcing people to have to invest their money or find something to buy which keeps the money circulating. By moving the ability to park money and have idle cash at the bank they are stimulating the Eurozone and forcing money into the economy smi(&%
Yes, that's the logic. It's happening that people are buying stuff (flats for rents or stocks) just to "get rid of the money" but I don't think this way of "demonizing" cash is good in the long run...
Will this create another recession after stock and housing markets get blown by so much cash that's being pumped in...
 

BlueMist

Building Trust
Entrepreneur
The (*) in document shows the 0.5% is being charged on an annual basis. So basically they are passing on the ECB's charge of -0.5% they pay to keep your cash at ECB. Nothing wrong with that. BoC can no longer support paying the negative fee for its customers and just passed it on.

Remember UBS did the same to me with the -0.75% they passed on which would mean I pay 15,000 CHF a year just to keep 2m in CHF. And people thought I was crazy taking cash from Switzerland after they announced this :rolleyes:.

Anyway all banks and EMI's will have no choice but to pass on negative EUR and CHF rates to customers sooner rather than later.
UBS is charging 0.6% but per annum, so BOC is charging 10x more... Anyway, who is keeping large deposits in Cyprus banks these days? No matter what they will do, the damage has been done few years back and now they have to wait for a very long time before people forget what happened. For me BoC is in and out and keep things low.
 

JimBeam

Building Trust
Entrepreneur
UBS is charging 0.6% but per annum, so BOC is charging 10x more... Anyway, who is keeping large deposits in Cyprus banks these days? No matter what they will do, the damage has been done few years back and now they have to wait for a very long time before people forget what happened. For me BoC is in and out and keep things low.
No, actually it's my mistake... They charge 0.5% anually (so less than UBS).
It's a corporate account of my company registered in Cyprus. What's "large deposit" in your point of view? Have currently 1/2M and will probably have 1M by the end of the year..
 

BlueMist

Building Trust
Entrepreneur
No, actually it's my mistake... They charge 0.5% anually (so less than UBS).
It's a corporate account of my company registered in Cyprus. What's "large deposit" in your point of view? Have currently 1/2M and will probably have 1M by the end of the year..
After what happened few years back in regards to deposit haircuts in Cyprus banks, I would never keep there anything more than €100,000, regardless of what all the "specialists" are saying about how the Cyprus banks have been restructured or how stable they are these days etc. For me Cyprus is a "failed banking" destination with a good corporate structures (trading or holding company). Neither of the big reputable banks are operating in this country anymore. There was Barclays which closed down their Cyprus presence few years back.
 

hernanday

Building Trust
Entrepreneur
I've always been curious as to why Cyprus was so popular on this site or even considered. Isn't that the first country to use bail-ins? I would never consider my money to be safe in a country who used depositor money to pay off bank debt outside of the existing law, that is straight dictatorship/fascist/communism/banana republic behaviour. It seems like the kind of country that might just steal it all.

Exchange your EUR to USD et voila (random chars to reach 50 characters)
If you do that, doesn't that mean your USD accounts are not safe/covered by depositor insurance? I believe they might be doing this on purpose so they can grab all the smart people usd when they fail, again.

Yes. Trump has said he wants to see USD negative interest rate. US rates have also been slowly creeping down towards zero also :oops:




You also need to consider that switching from Euros to USD for maybe a 1-2% yield in the Money Markets/deposits is pointless. You can lose twice that gain over time in the exchange rate loss/market movement between dollar and euro when switching back to spend :(.
Neg interest rates are good for real estate. It would be a no-interest loan you are paid to take out to invest into property. You'd basically be paid to take a loan. Like if you have -4 or -5% on a $300 million RE portfolio, refinance its basically like being paid $15 million to borrow money and its all highly leveraged.
 

Admin

Forum Moderator
Staff member
Yes. Trump has said he wants to see USD negative interest rate. US rates have also been slowly creeping down towards zero also :oops:




You also need to consider that switching from Euros to USD for maybe a 1-2% yield in the Money Markets/deposits is pointless. You can lose twice that gain over time in the exchange rate loss/market movement between dollar and euro when switching back to spend :(.
That's his weapon against China to win the trade war so the USA can stay to be the No.1 in the world.
 

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