N26 eliminates deposit costs for its customers

According to a media report, the Berlin-based fintech is reacting to the ECB's expected interest rate turnaround. Many other banks are still undecided.

The Berlin neobank N26 will no longer offer negative interest rates in future, according to the Handelsblatt reports. From July, it apparently intends to "no longer charge custody fees of 0.5 percent on deposits over 50,000 euros".

This is the start-up's response to the European Central Bank's (ECB) announcement that interest rates will rise this year. "In order to pass on the benefits of this as quickly as possible and to support our customers in the current times, especially with savings plans, we are waiving the deposit fee early," says N26.

After several years of ultra-loose monetary policy, the ECB announced at the beginning of June that it would change course and stop its multi-billion euro bond purchases by the end of the month due to high inflation. The key interest rates will also initially be raised by a quarter of a percentage point. The decisive factor is the current interest rate for commercial bank deposits at the central bank, which is minus 0.5 percent.

N26 claims to have over seven million customers in 24 countries. In its last financing round in October, the Berlin-based company reached a valuation of around 8.5 billion euros, compared to 7.8 billion euros eight months ago.

Only a few banks had previously abolished negative interest rates for their customers in preparation for the ECB's interest rate changes. The first major retail bank to announce such a move was ING Germany in mid-May. On July 1, the direct bank increased the allowance for balances in current and call money accounts from EUR 50,000 to EUR 500,000. However, many banks do not want to give up their negative interest rates until the ECB's penalty rate has been abolished. Deutsche Bank, for example, announced in mid-June that the amount of the deposit fee will depend on the ECB's deposit rate.