Negative Interest for Business Customers
Help and guidance on negative interest for business customers
We currently apply negative interest to the accounts of business customers that have combined balances of €1 million or more across their business current and deposit accounts. If the combined balance reaches €1 million or more we write to customers to give them notice that we will apply negative interest to their accounts and let them know what it means for them. When we apply negative interest we apply it to all balances.
What is negative interest?
How have negative interest rates come about?
Since 2014, all banks in the EU have had to pay negative interest to their central bank. We’ve delayed introducing negative interest for as many of our customers for as a long as possible. However, European Central Bank negative interest, market conditions and the cost of providing current and deposit product services, now mean that some banks in the EU have had to introduce negative interest for their customers.
What are negative interest rates?
Negative interest applies to positive balances in a bank account. This means that there is an interest cost to keeping money in a bank account when balances are above a certain amount. This negative interest cost is separate to fees and charges associated with bank accounts.
For how long will interest rates be negative?
Interest rates on deposits have already been negative for much longer than expected. There are differing forecasts as to how long they will remain negative.
How is negative interest applied?
We currently apply negative interest to business customers’ accounts that have combined balances of €1 million or more across their current and deposit accounts. A monthly review process is completed and more information about this is in the notice letter we send to customers impacted by negative interest rates.
How much will negative interest cost?
Negative interest rates are confirmed through our Relationship Manager engagements or in the notice letter we send to customers impacted by negative interest rates. The combined balance amount for negative interest application, currently €1 million, and the negative interest rate are variable and are subject to change.
For illustration only: if a customer holds a constant balance across their accounts of €1 million over a period of 30 days and if the rate was -0.50%, this would mean that they will pay €410.96 in negative interest for that same period. As balances usually fluctuate throughout the month, the amount paid may differ to the amount illustrated.
If negative interest is no longer applied to my accounts can it be re-applied?
We monitor customer accounts regularly. If the combined balance reaches €1 million or more at a later date we will write again to provide the customer with new notice that we will apply negative interest to their accounts.
What are my other options?
There are alternatives to holding cash in accounts on which we apply negative interest rates. A review with a financial advisor can help you understand how you might invest money, plan for your retirement and protect your family income. This may help you to reduce negative interest rate costs but more importantly it can help protect you and your family’s finances.
We have a team of highly qualified and experienced financial advisors who can help you consider if alternatives meet your needs. We can talk you through your long term financial objectives and help you plan to achieve them. We can do this remotely or in branch at a suitable time.
Negative interest rates Questions & Answers
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How do I know if negative interest is going to apply to my account(s)?
- If your combined balances across your business current and deposit accounts are €1 million or more and we are not already applying negative interest to your accounts, we will write to you to give you notice that negative interest will be applied to your accounts.
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How do you calculate the combined balance across my accounts?
- Combined balance means the total of all euro balances across a customer’s current and deposit accounts.
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Where can I see the cost of negative interest on my accounts?
- On the first working day of the month you will see any negative interest due deducted from your account balances and you can see this on your account statement.
- If you are a Business customer with access to iBusiness Banking (iBB) you can see the daily accrual on each of your accounts on iBB.
- If you have a grouped account structure, interest will also be grouped. If you would like to make a change to your grouped structure, please contact your Relationship Manager or local branch.
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What happens if I want to take out money from an account that has negative interest applied?
- You can access your money and accounts without restriction, but when taking out money, you will need to ensure that enough money remains in the account to cover any negative interest that may have accrued but not yet deducted from your account. This includes where you have asked for another account to be used for the deduction of negative interest.
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Is negative interest an allowable expense and can I claim the cost on my Tax Return?
- We recommend that you engage with your accountant or financial advisor to understand how negative interest might be accounted for in your tax returns.
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I have more questions on the Terms and Conditions changes which come into effect from the effect from 15 February 2022.
- We must inform our customers when there are any changes to our Terms and Conditions for the products they have, even if they are not affected by them. To find out more about these changes click here.
Talk to us
If you have further questions or want to discuss this with a member of our team you can contact us by
Allied Irish Banks p.l.c is tied to Irish Life Assurance plc for life and pensions business. Allied Irish Banks p.l.c is regulated by Central Bank of Ireland. Irish Life Assurance plc is regulated by the Central Banks of Ireland.
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