Forex Flash: Franc under performance since CS announcement – BBH (Barcelona) - The analysts at Brown Brothers Harriman note that the Swiss Franc has underperformed since Credit Suisse announced plans yesterday to charge fees on interbank deposits starting next week.

They highlight reports today as suggesting the fee may be as high at 1% and although there was some confusion yesterday, other Swiss banks have not followed suit. UBS will reportedly continue to charge fees on interbank accounts with high franc balances.

Even though the Swiss National Bank does not have a negative deposit rate, administrative costs and regulatory pressures to reduce bank balance sheets has made large franc deposits less desirable.

They write, “Recall that 1-2 non-Swiss banks have been charging to hold franc deposits. The Euro has gained about 0.8% against the franc since CS made its announcement to trade at its best level (above CHF1.21) since mid-September. Quantitatively speaking, this is a large move and puts the Euro more than 4 standard deviations above its 20-day moving average against the franc.  The last time such a dramatic move took place on September 7, the Euro pulled back over the next several sessions.”