Franc Drops as USB Announces Dates of Levy Implementation for Franc Balances

Franc, the major currency of Switzerland dropped against Euro as the biggest bank of the country; USB AG announced the date of implementing a levy on the financial institution’s customers from 21st December. The levy will only be charged to those customers who hold credit balances in Franc. USB stated that this decision was taken because of the continuing prevailing market situation that is affecting the Swiss Franc badly in recent times. This decision is a part of series of corrective actions that is to be taken, as confirmed by USB. The decision was mentioned in a notice which was published on the Swift system of the bank. The notice also stated that this levy may be implemented in other Swiss banks in future as well; after negotiating with the Central Bank of Switzerland and seeing the impact of the same being applied to USB.

This decision of USB affected Franc badly as the same dropped by 0.3% against Euro. It is priced at 1.2111 per Euro, currently. At one time, Franc depreciated to 1.2127 per Euro marking the lowest value since 6th December, but, later, it surged a bit. However, against USD, Franc was more or less changed. It is priced at 93.38 Centimes against 1 USD.

The announcement of this levy implementation was made on 3rd December itself; however, the exact date of starting the process was confirmed today. Since 3rd December, the Franc has slid down to the lowest level in the last 3 months, against Euro.

On September, 2011, The Swiss National Bank decided to implement a ceiling of 1.20 Francs per Euro so that the exporters of the country can be protected. Incidentally, during that time, the investors who were seeking a safe haven from the debt crisis affected Euro region, sent the currency to a record.

The notice also stated that the particulars of this new levy will be communicated to the clients individually and this intimation process should be completed within this week or early next week. According to analysts, this decision of USB reflects the mindset of the bank to request customers to keep as low Swiss Franc balance as possible in their bank accounts. Incidentally, Central Bank of Switzerland has not made any official statement so far regarding this decision of USB to introduce new levy.