Operating in a low interest rate environment

Should the bank start charging its savers by applying negative interest rates? Or should we be willing to accept less or even to take a loss on money that the bank cannot lend directly, and wait until the ECB raises interest rates again?

The chief cause of all this is widely known: in its attempt to stimulate the economy and kick-start inflation, the ECB is holding interest rates at exceptionally low levels. Banks even receive additional funds if they borrow from the ECB, but conversely have to pay if they deposit short-term money with the ECB. The ECB hopes that this policy will encourage banks to lend more.

But the paradox is that consumers are actually saving more and more, even though they receive virtually no interest on their savings. When interest rates are low, savers have to put more aside in order to achieve their goals. 

Based on trends in the money market and capital market, banks should really be charging interest for money that clients are able to withdraw on demand. And the interest rates on money lent – mortgage rates, for example – are continuing to fall and are also at historically low levels. At ABN AMRO, retail clients do not have to pay for their savings.