Image: Man VyiNatWest and parent company Royal Bank of Scotland (RBS) have warned their combined 1.3 million business customers that they may be charged for depositing cash in the near future.
In a letter to the businesses, NatWest and RBS said: "Global interest rates remain at very low levels... this could result in us charging interest on credit balances."
It would make the banks the first in the UK to introduce negative interest rates. However, speaking to the BBC, RBS suggested that such a move would only take place if the Bank of England itself turned interest rates negative.
"We will consider any necessary action in the event of the Bank of England base rate falling below zero, but will do our utmost to protect our customers from any impacts," it said.
Mike Amey, managing director at the world's largest bond investor, Pimco, said the announcement could "possibly [be] a bit of a reminder to the Bank of England there are negative consequences [of negative rates]".
The Bank of England has kept interest rates at the record low of 0.5% since March 2009. But the Bank's governor, Mark Carney, has said "some monetary policy easing" will probably be required to boost economic growth following the vote to leave the European Union. Many had expected the Bank's Monetary Policy Committee (MPC), which sets rates, to cut them to 0.25% in July, but they were left unchanged.
While the move may seem like a potentially harsh decision during uncertain times, when a central bank introduces zero or negative rates it is often done to encourage lending and investment, rather than holding onto cash. NatWest and RBS may be thinking along the same lines - its businesses customers are more likely to invest funds rather than deposit them, something which may be crucial in avoid an economic recession after the Brexit vote.
The Federation of Small Businesses (FSB) said it was deeply concerned by NatWest and RBS' announcement. Mike Cherry, national chair of the FSB, said: "Today's warning from NatWest and RBS will be deeply concerning to small firms. The FSB's latest research shows small business confidence is already at a four year low. Firms are less optimistic, cutting headcount and curbing investment intentions.
"When the Monetary Policy Committee meets next week to decide on interest rates, we would call on them to do everything possible to consider the implications of charging interest rates for smaller firms and the self-employed looking to maintain or grow their business."
Clive Lewis, head of enterprise at the ICAEW, urged businesses to prepare themselves for the possibility of negative rates. He said: "It is vital that all customers, but especially small business customers, check all communications from their bank and monitor their accounts. Banks are well within their rights to do this, but for small businesses where cash flow is tight, this could cause significant problems if they are not prepared.
"The danger is that this could have a distorting effect by incentivising customers not to keep their money in the bank - either prompting unwarranted spending or causing them to store money in ways that are less safe."
