Source: ABN AMRO Website

One of the largest Dutch banks, ABN Amro, has now warned its business clients a negative interest rate on the business accounts is in the works. The bank is currently updating its terms and conditions and will more specifically include its right to reduce the interest rates below zero as the bank wants to ‘protect itself’ against the continuously changing market circumstances.

Source: ewtdotorg.com

Even though this is a very interesting development, this isn’t really completely unexpected as the company’s CEO has released some ‘test balloons’ in the past. But this where it gets really interesting. ABN AMRO still is a government-owned and government-run bank. The bank’s CEO , Gerrit Zalm, wasn’t someone from the financial sector, but used to be the Netherlands longest-serving Minister of Finance being in office for no less than 12 years (or three complete terms).

Not only is it intriguing to see the bank that is being led by a bureaucrat rather than a banker being the first one to formally start talking about charging customers to park their money at the bank, it’s also very interesting to see it’s a government-owned bank taking the first step.

Source: quarterly report

Indeed, ABN AMRO was nationalized during the Global Financial Crisis in the previous decade and after floating less than a quarter of the share capital, a government-owned investment vehicle still owns approximately 77% of the bank’s shares (see the previous image) and thus stands to benefit from trying to get as much cash as possible out of the pockets of its clients.

But perhaps there’s a bigger picture here.

In our column last week, we expressed our surprise to see ABN AMRO had suddenly become very bullish on the previous metals after having bearish for the past several years. It does look a little bit like a ‘if you can’t beat them, join them’ scenario. The gold market didn’t crack and the gold price consistently traded above the $1000/oz mark and ABN AMRO’s target price of $800 per ounce was definitely out of reach.

Source: Bloomberg

On top of that, people might have forgotten (but we haven’t) that ABN AMRO was –as far as we know- the first bank which defaulted on its obligation to deliver physical gold to some of its clients. Even those clients had the right to redeem a certain investment in physical gold, ABN didn’t honor this commitment and offered those clients a payout in cash rather than delivering the metal which it originally promised to do.

So we have a bank controlled by a government that wanted to repatriate its gold, which is now proposing to reduce the interest rate below zero? We don’t believe in coincidences.

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