UBS AG and Credit Suisse Group AG, Switzerland’s biggest banks, are adjusting precious-metals charges for financial institutions.
UBS revised fees for unallocated accounts and offers an alternative physical account that has “a lower fee structure,” it said in an e-mailed statement. Both banks didn’t give specific details. The Financial Times reported earlier that the banks are trying to encourage holding metal through allocated accounts, where they would act as custodian and wouldn’t need to increase capital reserves. That’s instead of holding metal through unallocated accounts, which show up on balance sheets.
“There is a move internationally towards allocated storage and away from more risky unallocated storage,” Mark O’Byrne, the executive director of Dublin-based GoldCore Ltd., a brokerage that sells and stores bullion coins and bars, said by e-mail. “With unallocated storage, one is an unsecured creditor of the provider or bank, whereas with allocated, the client directly owns the gold and the gold cannot become encumbered.”
Gold prices jumped about 80 percent in the past four years on demand for a protection of wealth and alternative to currencies as central banks boosted stimulus and Europe’s debt crisis continued. Investors’ holdings of gold, silver and platinum through exchange-traded products reached records last month or this month, data compiled by Bloomberg show. The underlying gold in the SPDR Gold Trust, the biggest bullion-backed ETP, is held in allocated form, according to the provider’s website.
UBS is Switzerland’s biggest bank and Credit Suisse the second-largest. The Financial Times cited unidentified clients and people familiar with the decisions in the report. Swiss bank Julius Baer isn’t planning to raise charges on gold holdings, spokesman Martin Somogyi said today by phone.
Barclays Plc opened its first precious metals vault in London last year as demand to store the commodities rose. Banks and security firms from Malca-Amit Global Ltd. to Deutsche Bank AG are also planning to open or increase storage facilities.
“Although Malca-Amit sees a rise in demand for physical storage of precious metals in Asia, our capacity has been increased as well and market conditions do not justify a raise in storage charges,” Joshua Rotbart, Singapore-based general manager for Malca-Amit Precious Metals, said by e-mail and phone today. “Storage rates differ based on clients’ requirements and the holdings size. They are usually well below 20 basis points of bullion value.”
Malca Amit’s expansion into Singapore and Hong Kong since 2010 added more than 1,000 metric tons of capacity to the market, Rotbart said. The company’s Shanghai vault will open in the third quarter of this year, he said.