Custodial fees or custody fees are fees which custodian banks charge customers to hold and manage securities held in custody accounts (also known as safekeeping accounts). When you make use brokerage accounts or wealth management services, or if you buy medium-term notes, your securities are held in at least one custody account.
Costs differ broadly between custodian banks
Depending on the custodian bank you use, you may pay very high custodial fees just to hold securities. Comparing custodial fees and choosing the right custodian bank can save you a lot of money.
The interactive broker comparison on moneyland.ch lets you easily compare custodial fees along with brokerage fees. Just select “Individual profile” and enter the numbers of each kind of security which you expect to hold under the “Securities in custody” section. Comparison results account for the 7.7% valued added tax (VAT) on custodial fees.
Fees vary depending on the type of securities
Some custodian banks charge different custodial fees for different types of securities. For example, banks may charge lower fees for the custody of their own medium-term notes or their own investment products than for other securities.
Some custodian banks also differentiate between securities held in a Swiss central securities depository (CSD) and those held in foreign CSDs. Banks that make this difference charge higher fees for securities held in foreign CSDs.
Some Swiss banks charge non-resident fees to customers who live outside of Switzerland.
Save up to thousands of francs
Larger securities deposits can easily generate custodial fees totaling thousands of francs per year. For example, UBS charges custodial fees equal to 0.35 percent of the account value for locally-deposited securities up to 10 million francs. It charges 0.55 percent for securities in foreign CSDs.
Credit Suisse charges 0.35% (local CSD) or 0.5% (foreign CSD) for up to 5 million francs of securities. It has a minimal custodial fee of 5 francs per month per investment position.
The Zürcher Kantonalbank charges monthly custodial fees of 0.3% (local CSD, minimum 3 francs per investment position) or 0.4% (foreign CSD, minimum 4 francs per investment position).
It is worth noting that online brokers charge lower custodial fees than major banks do.
Custodial fees at Swiss online broker Strateo are just 0.02% (minimum 15 francs per quarter, maximum 35 francs per quarter). Note: Strateo charges inactivity fees when you do not place a minimum of 1 trade every 6 months.
Saxo Bank charges a monthly custodial fee equal to 0.12% of account value (minimum fee: 5 francs) to hold stocks (including ETF shares) and bonds. Note: Saxo Bank charges an 89-franc inactivity fee for each quarter during which you do not place at least 1 order.
CornèrTrader does not charge custodial fees. However, as of July 2019, it charges a 35-franc inactivity fee per quarter (plus VAT). That comes to a maximum inactivity fee of 140 francs plus VAT per full year in which no orders are placed.
PostFinance charges 90 francs per year for its custody accounts. However, the 90-franc custodial fee is credited towards (possible) brokerage fees.
Securities transfer fees compared
In Switzerland, moving to a new custodian bank is not difficult, but it can be very expensive. Securities transfer fees are typically between 50 and 100 francs, but they can be as high as 200 francs. That fee applies to each title (each stock, ETF or bond). If you own shares in multiple stocks, you can end up paying a huge amount of money to transfer all the securities in your custody account. The purpose of these high transfer fees is to discourage you from moving to a different broker.
Many banks also charge you fees when you withdraw your securities. Fees for the withdrawal of physical securities are notably higher than those for the withdrawal of book securities. Some custodian banks charge as much as 500 francs per stock title for delivery of physical stock certificates or notes. You can find useful information on this topic in the moneyland.ch guide to bank transfer fees.