By Frank Siebelt and Hans Seidenstuecker
FRANKFURT, Sept 3 (Reuters) - Germany's central bank does not want banks banned from charging retail customers negative interest rates to improve profitability, an official said.
Joachim Wuermeling, a member of the board of the Bundesbank, told Reuters that consumers should be protected but that banks must have leeway to manage their costs.
The comments come amid a debate in Germany and elsewhere in Europe about whether banks, long under pressure from ultra low interest rates, may pass along charges they incur when they park their cash at the central bank.
Bavaria's premier Markus Soeder has suggested banks be prohibited from charging retail customers negative interest rates for accounts of less than 100,000 euros ($111,440.00).
"If banks were forbidden from charging negative interest rates, they would lack a possible instrument to be profitable," said Wuermeling, who is responsible for banking supervision on the Bundesbank's executive board.
Profitability was an important buffer for the financial system and helped foster investment, he said.
Since 2014, the European Central Bank has charged lenders to store their cash, with the so-called deposit rate currently at minus 0.4%.
Banks in Germany paid 2.4 billion euros to the central bank to hold cash in 2018, the German government said in response to a parliamentary inquiry on negative interest rates.
Some banks have passed along that cost to their corporate and wealthy clients, but banks have so far shied away from charging regular savers.
($1 = 0.8973 euros) (Writing by Tom Sims Editing by Edmund Blair)