Sub Zero: Negative Interest Rates



As of late negative interest rates and negative yields have become the new normal and they are affecting all participants in the financial markets. The rates and yields can be found in various currencies and they aren’t limited to single days or brief periods of time, nor are they in the edges of the yield curves and they certainly aren’t one-off observations.

In the medium term one can expect the rates and yields to rise and return to the old normal, this does however still leave a large challenge behind; underpinning all models and systems is the assumption of positive rates. To recalibrate and implement the required, and fundamental, changes amount to a considerable effort.

Taking banks as an example; when negative interest rates first appeared securing orderly processes became banks’ highest priority. The initial approach was to create technical work-arounds and manual processes to ensure that the daily production could continue. A direct consequence of this approach is unnecessarily high risks and costs (e.g. additional risk buffer, manual processing is error prone and time consuming, etc.). Once the daily production has been ensured attention and efforts should be turned to establishing a sustainable solution, which in turn reduces both the risks and the costs.



We support you


Whether you are a bank, insurance company, asset manager or a corporation: We have the experience and knowledge to work together with you to establish a sustainable and cost saving solution that is tailored around your business.

We support you in:

  • structuring, planning and executing your projects - systematically and thoroughly
  • defining the functional targets - from the review of business strategies (where we consider the changed risk-/return profiles of products), over changes to the applied models (e.g. valuation models) to the details in your IT-systems
  • implementing and incorporating the solutions in the business processes


For further information on our experience in, and our approach to the topic of, negative rates, please contact us via phone +49 69 907370 or mail, reference "Sub Zero“.