1 Negative interest rates hit European banks (BBC) Swiss bank UBS will start charging customers who deposit more than a million euros, as negative interest rates hit banks’ profits. The annual 0.6% charge will take affect from May. UBS already imposes charges for large accounts held in Swiss francs by companies and some wealthy clients.
Banks’ profits have been hit by the European Central Bank’s policy of stimulating growth through negative interest rates and increased liquidity. The ECB penalises banks that store euros with it in an effort to make them lend rather than hoard their cash.
It imposes a so-called negative rate, equivalent to four euros annually on each 1,000 euros that lenders deposit with the central bank. Banks in Sweden and Switzerland, which are outside the eurozone, pay a similar charge.
A UBS spokesman said: “This charge reflects the increasing costs seen across the industry of reinvesting cash from deposits in money and capital markets, the continued extraordinarily low and negative interest rates in the euro area and increased liquidity regulations.”
Commerzbank has even considered storing cash in vaults to avoid paying ECB fees. The policy of penalising banks has come under criticism in Germany because it discourages saving.
2 Fresh oil glut predicted (Khaleej Times) New production projects and a fresh shale boom could boost oil output by a million barrels per day (bpd) year on year and result in an oversupply in the next couple of years, according to Goldman Sachs.
“2017-19 is likely to see the largest increase in mega projects’ production in history, as the record 2011-13 capex commitment yields fruit,” the US investment bank said in a research note. The Opec’s landmark decision to limit output for the first time in eight years in a bid to arrest the existing supply glut reduced price volatility and increased stability, unintentionally helping the shale producers, the bank said.
The Organisation of the Petroleum Exporting Countries agreed to curb its output by about 1.2 million bpd from January 1 this year. Russia and 10 other non-Opec producers agreed to jointly cut by an additional 600,000 bpd.
3 FTSE 100 CEOs earn 386 times average worker (Katie Allen in The Guardian) The average FTSE chief executive earns 386 times more than a worker on the national living wage, according to an analysis published by the Equality Trust as it steps up its campaign for new government rules to expose pay gaps.
The charity used annual reports from 2015 for all the companies in the FTSE 100 to calculate that their CEOs pocket an average of £5.3m each year, compared with £13,662 for someone on the national living wage of £7.20 an hour.
The trust issues its findings amid growing worries over a squeeze on living standards from sluggish pay growth and rising inflation. The pressures on households stem partly from Brexit worries knocking the pound lower and raising the price of imports to the UK. Those factors underscore the challenge for Theresa May to take the UK out of the EU while vowing to cut inequality and create an economy that “works for everyone”.
Chiming with research by other groups that suggests the squeeze will accentuate inequality, the trust found more than two-thirds (67%) of FTSE 100 CEOs were paid more than 100 times the average UK salary.
The trust’s “pay tracker” report highlights the big gaps between FTSE bosses such as Sir Martin Sorrell of advertising firm WPP, who was awarded more than £40m in 2016, and public sector workers, who have seen their incomes squeezed by years of austerity.
The Equality Trust analysis found that FTSE 100 chief executives are now paid 165 times more than a nurse, 140 times more than a teacher, 132 times more than a police officer and 312 times more than a care worker.