UPDATE 1-Big Swiss banks to charge fees on some franc deposits
(Adds comment from central bank; detail on charges)
ZURICH, Dec 3 (Reuters) - Switzerland's largest banks are to charge fees and pay negative interest rates on Swiss franc deposits made by rivals to encourage them to limit their holdings of the currency.
To shield the economy from deflation and a recession, the Swiss National Bank set a floor of 1.20 francs per euro in September 2011 after safe-haven buyers anxious about the euro zone debt crisis pushed the franc close to parity with the euro.
"We invite out customers to keep cash balances as low as possible to avoid negative credit charges," Credit Suisse said on Monday in a statement to clients seen by Reuters.
UBS said in a statement: "In cases where we see net inflows in cash clearing accounts above a certain threshold, we continue to take corrective action, by means of a temporary excess balance fee".
UBS first said in August 2011 it could penalise third-party bank clients for holding francs.
A spokesman for the SNB would not comment.
Nearly two months ago, Bank of New York Mellon and State Street were among custody banks to begin charging fund management clients for deposits in Danish crowns and Swiss francs.
The move followed interest rate cuts by Denmark and Switzerland to protect their currencies from investors seeking a safe haven from the euro crisis.
The rate cuts have made it difficult for the custody banks, which administer funds for asset managers and pensions, to cover their costs in certain areas.
(Reporting By Katharina Bart)