The Federation of Small Businesses (FSB) said news that Royal Bank of Scotland (RBS) and its NatWest subsidiary might consider charging business customers to deposit money would be “deeply concerning” to small firms throughout the UK.

The Press Association (PA) reported that in a letter setting out changes in terms and conditions to 1.3 million customers across NatWest and RBS business and commercial banking, the banking group warned it might charge customers in the event of negative interest rates.

PA said the letter warned: “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.”

An RBS spokesperson said: “We will consider any necessary action in the event of the Bank of England Base Rate falling below zero, but will do our utmost to protect our customers from any impacts.”

Mike Cherry, National Chairman at the Federation of Small Businesses (FSB), said: “Today’s warning from Natwest and RBS will be deeply concerning to small firms.

“FSB’s latest research shows small business confidence is already at a four year low.

“Firms are less optimistic, cutting headcount and curbing investment intentions.

“When the Monetary Policy Committee meets next week to decide on interest rates, we would call on them to do everything possible to consider the implications of changing interest rates for smaller firms and the self-employed looking to maintain or grow their business.”