Background
Negative interest rates are currently the subject of intense discussion in the banking sector. Coverage of this topic in the legal literature and case law has recently come under intense scrutiny by lenders, borrowers and depositors.
Impact on loans
Banks and borrowers agree on a variable interest rate using an interest escalation clause that ties the interest rate to a benchmark interest rate. If the reference interest rate is correspondingly low – due to the current low interest rate phase – this can result in an arithmetically negative interest rate for the loan. As a result, borrowers are increasingly demanding payment of negative interest from lending banks.
Directive of the German Civil Code
According to § 488, paragraph 1, sentence 2 of the German Civil Code, the borrower is obliged to pay interest. Interest is the remuneration of the transfer of capital, measured according to the duration, and independent of profit and turnover. Therefore, the statutory interest model does not provide for a demand for payment of negative interest. The interest due to an interest indexation clause can therefore at most fall to zero, but cannot lead to an obligation for the lender to pay the borrower a remuneration for the capital contribution.
Courts Direction
A court will consider the commercial context of disputed agreements. With regard to older agreements, it can be assumed that the parties did not take negative interest rates into account at all. Also, interest rate floors were very unusual at that time. Therefore, the absence of a floor does not lead to the conclusion that the lender has an obligation to pay interest in the event that the application of the interest indexation clause results in a negative interest rate.
Several regional courts (see for example, Regional Court of Hamburg, judgment of 4 December 2020 – 318 O 367/19, Civil Chamber 2b of the Regional Court of Düsseldorf, judgment of 24 June 2020 – 2b O 254/18, Regional Court of Stuttgart , judgment of October 20, 2021 – 14 O 770/20) as well as a higher regional court (Higher Regional Court Düsseldorf, judgment of October 28, 2021 – I-5 U 29/21) have therefore already rejected claims against banks for the payment of negative interest arising from Schuldschein loan agreements.
Despite these elements, the Higher Regional Court of Hamburg, judgment of May 11, 2022 – 13 U 2/21) and the 13th civil chamber of the Düsseldorf Regional Court (judgment of March 11, 2020 – 13 O 322/18) each upheld at the request of a borrower against a lending bank. According to the courts, fluctuations in interest rates in variable interest rate clauses affect both contracting parties, whether the interest rates are positive or negative, and, according to the supplementary interpretation of the agreements, an obligation of the lender’s payment for the negative value corresponds to the hypothetical intention of the parties.
Impact on deposits
In the meantime, things are going badly for customers of deposit banks. First, they earn no meaningful interest on their deposits. Secondly, nearly 600 banks and savings banks in Germany charge their depositors a negative interest rate, also known as penalty interest or custody fee, on higher amounts in private current accounts and sight accounts. In most cases, the negative interest rate is 0.5%. This is the same as the interest rate the European Central Bank charged commercial banks for short-term deposits.
The view of the courts
According to previous decisions (see, for example, Regional Court of Leipzig, judgment of 8 July 2021 – 05 O 640/20, Regional Court of Tübingen, judgment of 26 January 2018 – 4 O 187/17 – and judgment of 25 May 2018 – 4 O 225/17) for the admissibility of negative interest, a distinction must be made between new customers and existing customers. In the case of new mandates, individual agreements on negative interests are allowed, provided that this is sufficiently clear in the agreement. In the case of old mandates, a subsequent modification of the price display is not sufficient. In addition, according to case law, charging negative interest is not permitted if an account management fee has already been agreed. In addition, according to recent decisions of the Regional Court Düsseldorf and the Regional Court Berlin, a credit institution may not charge additional fees for custody of deposits in addition to account management fees for current accounts (Regional Court of Düsseldorf, judgment of 23 December 2021 – 12 O 34/21), and the levying of a custodial commission for payment service contracts is not compatible with the fundamental ideas of the legal provisions (Berlin Regional Court, judgment of October 28, 2021 – 16 O 43/21).
BaFin’s point of view
The Federal Financial Supervisory Authority (BaFin) has also looked into this issue, leading it to prohibit online brokers from charging negative interest rates on demand deposits and existing customer balances. BaFin also determined that custody fees for existing customers were unenforceable if such fees were introduced in the bank’s terms and conditions.
However, an action for annulment brought against the prohibition order was successful (Administrative Court of Frankfurt am Main, judgment of June 24, 2021 – 7 K 2237/20.F) because, of the court opinion, BaFin had not sufficiently addressed the issue of whether it had the power to issue a restraining order, given that restraining orders are only permitted if general clarification is required by law. supervisory authority. Where a decision by a superior or supreme court on the relevant legal issue is expected in the foreseeable future, the requirement is not met.
However, despite the cancellation, BaFin’s position on custody fees has been crystal clear.
The context
The decisions of the courts and the BaFin must be seen in the context of the judgment of the Federal Court of Justice on the modification of the general conditions by fictitious consent (judgment of 27 April 2021 – XI ZR 26/20, see Lending Focus, September 2021). In this judgment, the Federal Court of Justice ruled that banks cannot unilaterally and without restriction change the main contractual obligations of bank customers by means of a presumed consent of the customers.
Outlook
Given the abundance of legal proceedings on negative interest rates, it can be expected that the Federal Court of Justice will also rule on negative interest rates in credit and deposit cases in a near future.
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