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Negative interest rates on deposits: New normal in Denmark

If you are a customer in a Danish bank and have accumulated more than DKK 750,000, it may become hard to avoid paying negative interest rates on deposits.

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By Bente D. Knudsen

Denmark’s largest bank, Danske Bank, had said that it would not do so, but yesterday they announced the introduction of the negative interest rate measure on deposits as well, claiming that one reason to do so, was that they were getting deposits of large sums from new clients, apparently clients who were trying to split their fortune between several banks to avoid the negative deposit rate.

Danske Banks new measure will be implemented as of 1 June 2020, where for current customers ( those who have their main account, the NEM account, in the bank), a negative interest rate of 0,75 percent will be applied to a deposit of more than DKK 1.5 million, for other clients, the negative interest rate of 0,75 percent will be applied from deposits of DKK 750,000.

Dansk Bank’s new measure could affect a range of well paid expats;it is the only Danish bank to have a full English language version of their general website, as well as for their English language netbank option and the bank has attracted many expats due to the international department set up for foreigners living in Denmark at the HQ in Copenhagen City.

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The third largest bank in Denmark, Jyske Bank, were the first ones to introduce negative deposit rates back in August 2019, when they launched a charge of 0,75 percent a year for clients with deposits of more than DKK 750,000.

Since August 2019, a range of Denmark’s largest banks have followed suit, as Nordea, Sydbank and Nykredit during the past six months also launched negative  interest rates on deposits. Danske bank is the last of the top five to do so.

The amount of DKK 750,000, is equivalent to the Danish State’s guaranteed deposit amount. Should a Danish bank go bankrupt, a Danish bank client can never lose the first DKK 750,000 deposited in a given bank.

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Top 10 Danish banks according to size:
Danske Bank
Jyske Bank

Spar Nord Bank
Arbejdernes Landsbank
Ringkjøbing Landbobank
Vestjysk Bank
Sparekassen Kronjylland

The classification of Danish financial institutions is based on the working capital employed. The first five banks are the biggest with a capital employed above DKK 75 billion, the last five with a capital employed above DKK 12 billion. Nordea is strictly speaking not a Danish bank as it is owned by a Finnish financial group.