KITAKYUSHU, FUKUOKA PREF. – Some community banks are bucking an industry trend by raising interest rates on customers’ deposits to reassure savers worried about the Bank of Japan’s newly imposed negative interest rate.
Onga Shinkin Bank, based in Okagaki, Fukuoka Prefecture, announced Monday it will launch a new one-year time deposit product that accrues interest at a rate of 0.15 percent, compared with 0.025 percent on existing similar products.
It began accepting applications for the product from Tuesday, when the BOJ’s negative rate took effect.
Kumamoto Dai-ichi Shinkin Bank, based in the city of the same name, launched a similar time-limited product last week. An annual rate of 0.1 percent will apply to savers under 50 years old if they deposit at least ¥500,000, and 0.08 percent for savers who are older than that and who deposit at least ¥1 million.
On Tuesday, the BOJ imposed an interest rate of minus 0.1 percent on some deposits that banks hold there, as part of ongoing efforts to achieve 2 percent inflation.
The BOJ policy, decided late last month, has prompted many banks, including major banking groups such as Bank of Tokyo-Mitsubishi UFJ, to lower deposit rates.
The two community banks are bucking the trend in part because customers have been asking them whether their deposits, too, would suffer negative rates — fearing having to pay what amounts to a fee on their savings.
“We won’t cut deposit rates below zero, including on ordinary deposits, at least for the time being,” an official at Onga Shinkin Bank said.
“We hope to alleviate negative sentiment as much as we can,” said the official.