The Dutch government hosted cash deposits owned by Deutsche Bank and would normally pay interest on it. But market interest rates turned negative – so should the bank pay instead? In the struggle between Deutsche Bank and The Netherlands, the UK Court of Appeal just said forget it.
The outcome, reported by Risk.net, was apparently expected. The ruling upheld one made by a British commercial court last year. Those interested in the detail of the case could find it rewarding to read a Lexis Nexis banking and finance column by lawyer/blogger Emma Millington, written after the lower-instance verdict in July 2018.
Put simply, the court then saw no obligation for Deutsche Bank to pay, because the agreement (being an industry standard 1992 ISDA Master Agreemend) did not state that there is one.
Finance minister: All others pay
When the Dutch government took the issue to court in 2017, Dutch finance minister Jeroen Dijsselbloem claimed that “all other counterparties with the Dutch state are paying negative interest on the collateral that is held in cash”, according to an article by news site Dutch News.