EU backs banks charging for deposits

AIB, Bank of Ireland, and Ulster Bank all charge on deposits of more than €1m

AIB is to increase the amount it charges for large depositors to keep money in their accounts.

The EU has backed the practice of banks charging their customers for keeping money in their deposit accounts, just as costs are set to rise for Irish depositors.

Denmark had questioned the legality of its banks charging negative interest rates on deposits, but the European Commission has said the country’s banks are unlikely to be breaching any regulations by doing so.

It coincides with AIB announcing it will – by the summer – charge its larger savers more to keep money on account. It will apply the charge to all businesses and individuals with deposits of more than €1m. That threshold was previously €3m. Bank of Ireland and Ulster Bank also charge on deposits of more than €1m.

AIB will now have a -0.75% rate on high deposits, up from -0.5% currently.

“AIB has insulated the vast majority of our customers during a sustained period of European negative interest rates. The huge growth in customer balances, especially during the pandemic, has increased the cost to the bank of providing current and deposit product services, including negative interest rate costs," a spokesperson said.

Consumer advocate Brendan Burgess said the issue of dwindling deposit values effects everyone, with inflation currently running at over 5%, no matter how much money they have on account.