Russia’s central bank said on Friday it would investigate the legality of some banks’ plans to impose fees on foreign-currency accounts, warning that lenders should not make terms worse for existing customers.

Some major Russian banks plan to charge fees on retail accounts in dollars and euros after authorities floated the idea of ​​negative interest rates for foreign currency deposits from corporate clients of the banks, sparking anger among customers .

The central bank said it understood banks’ concerns about the risks of foreign currency transactions, but said it would take supervisory action if lenders were found to have breached contracts with their actions .

Unilateral changes to the terms and conditions of a bank deposit agreement that shorten its term, reduce interest or introduce fees are a violation of banking laws, the central bank said in a statement.

“Thus, banks cannot impose fees on already opened foreign currency accounts,” he said, adding that banks can refuse to offer foreign currency products to customers.

The central bank said in late May that the share of foreign currency liabilities of Russian banks had recently declined as customers stepped up withdrawals of funds from their foreign currency accounts, while the share of banks’ foreign currency assets had increased.

The bank then said that Russia could consider imposing negative interest rates on deposits held in dollars and euros, clarifying that these discussions only concerned foreign currency deposits of corporate customers with banks, not those particular customers.

Banks are starting to charge fees on Forex accounts

On Thursday, Russian online bank Tinkoff announced a 1% monthly fee for certain foreign exchange accounts after its counterpart, the Russian unit of Raifeissen Bank International, promised negative interest rates on certain foreign currency holdings to from June 30.

Tinkoff, who offered exchange rate incentives to encourage Russians to transfer their foreign currency holdings into rubles, said the 1% service fee would be deducted monthly from accounts in dollars, euros, pounds and Swiss francs with a balance of over $1,000, starting in June. 23.

Raiffeisen said on Thursday it would raise foreign currency transfer fees, while Rosbank, which Societe Generale sold to a company linked to Russian oligarch Vladimir Potanin in May, said it was considering charging fees on accounts in dollars and euros by the end of June.

After the bank’s statement, customers of Tinkoff, owned by TCS Group Holding, complained about empty ATMs on a message board.

“So let’s get out some money, what are you freaks doing!” one user wrote shortly after the bank announced it would introduce the fee.

Tinkoff’s support responded to a Reuters reporter saying they regularly top up their ATMs but could not say for sure when money would be added to those that had emptied.

Uralsib Bank, one of Russia’s top 25 lenders, has also introduced a fee on euro-denominated accounts.

“Forced measure”

With their already limited hard currency liquidity, Russian banks have few options for investing in foreign currencies due to capital controls in Russia and the risk of funds being frozen abroad due to Western sanctions.

State Duma representative Yevgeny Fedorov told a Moscow radio station that the prosecutor general should review Tinkoff’s decision, saying the bank had no right to impose charges on the accounts existing without notifying customers.

“According to Russian law… If you own your funds, then no one has the right to take that ownership away from you,” he said. “When people made the deposit, they didn’t expect the bank to start withdrawing funds from them.”

Tinkoff said financial institutions were limited in their ability to hold foreign currency securely “in the current geopolitical situation” and said an insignificant number of customers held amounts over $1,000.

“This is a forced measure. This is due to the unreliability of foreign partners in terms of foreign exchange operations for Russia and is aimed at reducing Tinkoff Bank’s foreign currency positions,” the bank said in a statement.

“In the near future, we will be offering accounts in alternative currencies.”

Tinkoff said it would only be possible to open ruble savings accounts from June 23, but would waive commission for transfers through the global payment system SWIFT until June 30. .

A similar measure would soon be enacted for foreign currency held in brokerage accounts, Tinkoff said.

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