A GERMAN bank has started charging customers to house large savings pots, as the fallout from the European Central Bank's (ECB) negative interest rate policy starts to bite.
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Raiffeisenbank in Gmund is implementing a penalty rate of 0.4 per cent on private clients with more than €100,000 (£86,000) in their account from September onwards.
Board member Josef Paul said: "We have contacted all the major investors specifically and advised them to start thinking.
"If we do not create incentives to make a change, nothing will change."
It comes as number of politicians from Angela Merkel's government have criticised the ECB's controversial negative interest rate policy, which are hurting German savers particularly hard and creating discontent.
The measures are aimed at getting firms lending, but banks that have to pay 0.4 per cent to park excess deposits with the ECB overnight,a re struggling to cope and passing the cost on to customers.
Many banks in Europe have scrapped free current accounts or increased the fees.
And the latest move by Raiffeisenbank has heightened fears that more banks will start to charge retail customers to keep cash.
Penalty interest has existed for many European corporate clients and institutional investors for almost two years now.
Last year, the Skatbank, a direct bank in Central Germany and belonging to the cooperative sector has also introduced negative interest rates for amounts over half a million euros in 2014.
The Federation of German Cooperative Banks (BVR) has tried to calm fears of German savers.
It said: "The BVR does not believe that we will see negative interest rates in retail banking in Germany. Not least due to the intense competition on the German banking market."
