September 18, 2019 / 6:31 AM / a month ago

UPDATE 1-Sumitomo Mitsui Trust to weigh account fees if negative rates deepen-Sankei

(Adds comments from Sumitomo Mitsui, regional bank lobby head)

TOKYO, Sept 18 (Reuters) - Sumitomo Mitsui Trust Bank Ltd will consider charging account holders a fee if the Bank of Japan (BOJ) decides to deepen negative interest rates, the head of the bank told the Sankei newspaper.

Under its ultra-loose monetary policy, the BOJ guides short- term rates towards -0.1%, eroding profit margins at financial institutions.

Charging fees “is something for the banking industry as a whole to think about,” Sumitomo Mitsui Trust Bank President Masaru Hashimoto told the Sankei in an interview.

If negative rates deepen, Sumitomo Mitsui Trust “will also consider it,” Hashimoto said.

An official of its public relations division later told Reuters that Sumitomo Mitsui Trust currently had no plans to introduce fees.

The BOJ adopted negative rates in 2016, adding to strains for commercial banks that saw ultra-low rates narrow the margin they earn from borrowing cheap, short-term funds and lending them to companies long-term.

With financial markets fairly stable, many analysts expect the BOJ to hold off on ramping up stimulus at its two-day rate review that ends on Thursday.

But the BOJ is brainstorming ways to deepen negative rates at minimum cost, as it considers adopting it as a main policy response to a slowing economy and intensifying global risks, sources have told Reuters.

Even some within the BOJ have become more worried about the rising cost of prolonged easing. BOJ board member Hitoshi Suzuki said last month that further declines in rates could do more harm than good to the economy as it would prompt financial institutions to charge a fee on deposits.

Ritsuo Sasajima, head of Japan’s regional bank lobby, said it was up to each commercial bank to decide whether to charge account holders a fee, according to Jiji news agency.

“The debate over whether to charge a fee shouldn’t be tied to monetary policy decisions,” he was quoted as saying on Wednesday.

Reporting by Chang-Ran Kim and Leika Kihara in Tokyo; Editing by Stephen Coates & Kim Coghill

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