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Franc Weakens After UBS Introduces Deposit Charges

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Dec. 11 (Bloomberg) -- Switzerland’s franc weakened against the euro after UBS AG, the nation’s biggest bank, said it will charge a levy on its financial-institution customers who hold cash balances in the currency from Dec. 21.

“Due to the continued prevailing market situation affecting the Swiss franc, we have decided to take additional corrective actions,” UBS said in a notice published on the Swift system yesterday. “As a consequence, we will start applying a charge for credit balances maintained by financial institutions in their Swiss franc accounts with UBS in Zurich.”

The franc fell 0.3 percent to 1.2111 per euro at 10:21 a.m. London time, after depreciating as much as 0.4 percent to 1.2127, the weakest since Dec. 6. It was little changed at 93.38 centimes per dollar.

The Swiss National Bank in September last year imposed a ceiling of 1.20 francs per euro to protect the nation’s exporters as investors seeking a haven from the euro-area debt crisis sent the currency to a record. The Zurich-based central bank declined to comment on today’s decision by UBS.

The franc slid to its lowest level against the euro in almost three months last week after Credit Suisse Group AG on Dec. 3 announced plans to introduce charges on franc balances.

UBS said its levy would be communicated individually to clients within days, adding that “we encourage our customers to keep their Swiss-franc balances as low as possible.”

To contact the reporter on this story: Zoe Schneeweiss in Zurich at zschneeweiss@bloomberg.net

To contact the editor responsible for this story: Craig Stirling at cstirling1@bloomberg.net

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