RBS set to charge companies that hold cash in their accounts

Royal Bank of Scotland (RBS) will start charging some of its corporate customers for keeping cash in their accounts from the beginning of next week.

The banking giant, which is still 73%-owned by taxpayers, is understood to have already contacted a number of its investment banking customers to warn them about the upcoming changes, according to the Financial Times.

"As you will be aware there are a number of currencies that now attract negative overnight rates for deposits," the letter said.

"To date we have been flooring deposit rates at 0% but we have now reached the stage where we can no longer sustain this level of floor. As a result of the continuing interest rate situation we will be implementing negative interest rates."

The move means that RBS, which earlier this month posted an operating loss of £274m (€316m) compared with an £265m operating profit in the corresponding period in 2015, will become the first British bank to charge negative interest rates on deposits.

Customers who trade futures and option contracts that must be processed via clearing houses in Europe are expected to be hit by the shift in policy. According to one source, clearing houses have begun charging negative interest rates since the European Central Bank cut interest rates earlier this year, and the Edinburgh-based lender is now passing on those charges to some of its corporate clients.

Last month, the FTSE-listed lender wrote to business customers in Britain to warn them that it might have to implement charges on deposits, should the Bank of England cut interest rates to below zero.

Meanwhile, the Bank of Ireland will become the first Irish lender to impose negative interest rates, after revealing it will start charging large companies to hold their money on deposit later this year.

The bank, which is 14% owned by the taxpayers, has warned large corporates and institutions that from October it will implement a 0.1% charge for deposits above €10m.