A major high street banking group has warned more than one million of its customers could be charged negative interest rates if market conditions change.
In a letter setting out changes in terms and conditions to 1.3 million customers across NatWest and Royal Bank of Scotland (RBS) business and commercial banking, the banking group warned it might charge customers in the event of negative interest rates.
READ MORE: Scots firm at centre of organised crime probe into weapons deal
The letter warned: "Global interest rates remain at very low levels and in some markets are currently negative. Dependent on future market conditions, this could result in us charging interest on credit balances."
A RBS spokeswoman said there was no precedent for charging personal customers negative interest rates and that it had no plans to do so.
She said: "We will consider any necessary action in the event of the Bank of England Base Rate falling below zero, but will do our utmost to protect our customers from any impacts."
In mid-July the Bank of England's Monetary Policy Committee voted to keep the base rate at 0.5%, where it has been since March 2009.
But Bank of England governor Mark Carney has hinted previously that the central bank may slash interest rates over the summer months from this already historic low.
Financial markets reacted sharply to the UK's Brexit vote in June, with the pound plummeting in its immediate aftermath.
READ MORE: Scots firm at centre of organised crime probe into weapons deal
Mr Carney said in his personal view ''some monetary policy easing will likely be required over the summer'', signalling a rate cut may be necessary as markets adjust to the reality of Brexit.
Prominent commentators on personal finance have said the move could see savers remove their money from banks.
Pensions expert and outgoing pensions minister Baroness Altmann told the Daily Telegraph: "Negative rates would be very dangerous,especially for ordinary savers - the danger is many people will just think, I'm going to put the money under the mattress. That could have security risks, especially for older people.
"You don't want your life savings out of the bank, you want them somewhere safe - but if the bank is going to charge you for keeping your money and every day you have it there it is worth less and less, you can see why people would say, I'm not going to do that."
Moneysavingexpert founder Martin Lewis, also speaking to the Daily Telegraph, said he expected the first bank to break the taboo of introducing negative rates to face uproar.
READ MORE: Scots firm at centre of organised crime probe into weapons deal
"The psychological impact of the actual money shrinking the cash terms would be huge and you would see a swathe of customers, at a level we've never seen before, ditching any bank that imposed negative rates," he said.
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules hereComments are closed on this article