Natwest and RBS warn of negative interest for business customers if Bank of England cuts base rate

Baroness Ros Altmann, the outgoing pensions minister, said that negative rates could be 'very dangerous'

The move could see savers remove their money from banks (Getty Images)

More than one million RBS and Natwest customers could be charged negative interest rates if the Bank of England cuts the base rate.

Natwest and RBS has written to 1.3 million business and commercial banking customers to warn that the group may charge customers to look after their cash if the base rate slips below zero.

"Global interest rates remain at very low levels and in some markets are currently negative. Dependent on future market conditions, this could result in us charging interest on credit balances," the letter said.

A RBS spokeswoman said that there was no precedent for charging negative rates and that the bank had no plans to do so, but that the group would consider any necessary action if the base rate fell below zero.

She said the bank would do its utmost to protect customers from any impacts.

RBS said that it has no intention to charge negative interest for personal banking customers. Negative rates could see savers remove their money from banks.

Baroness Ros Altmann, the outgoing pensions minister, said that negative rates could be "very dangerous".

“Negative rates would be very dangerous,especially for ordinary savers – the danger is many people will just think, 'I'm going to put the money under the mattress'. That could have security risks, especially for older people.

“You don't want your life savings out of the bank, you want them somewhere safe but if the bank is going to charge you for keeping your money and every day you have it there it is worth less and less, you can see why people would say, 'I'm not going to do that'," she told the Telegraph.

Mark Carney, the Governor of the Bank of England, was widely expected to announce the first base rate cut in seven years at the Monetary Policy Committee meeting on July 14.

However the nine person committee voted to keep the rate at 0.5 per cent 8-1.

Minutes from the MPC meeting dropped a heavy hint that a rate cut – or possibly more money printing – would come at the next meeting in August.

Disappointing manufacturing figures are expected to hasten a rate cut to encourage businesses not to put off investments after the vote to leave the EU.

The Markit/CIPs survey showed that the fallout from the UK's shock decision to leave the EU had given the economy a “good kicking”. The UK economy was shown to be contracting at its fastest rate since the 2009 recession.

A second survey on Monday showed that optimism among British businesses about the UK economy had fallen at the fastest rate since the 2009 recession.