Bankinter analysis team believes that the cut in the deposit rate to -0.50% (from -0.4%) further penalises keeping excess liquidity in the ECB. Tiering (or the method of charging in tranches) only partially mitigates the impact with a volume of up to six times the coefficient of obligatory reserves (currently 1.0%) exempt. This favours banks with higher and more internationally diversified ratios of credit investment/typical resources like Banco Santander and BBVA.
ECB deposit rate
Bankinter | Declarations by three ECB hawks (Weidmann, Bundesbank; Knot, Netherlands; and Nowotny, Austria) contrast with the dovish declarations of Lagarde, who takes over from Draghi as ECB President in October.
Negative interest rates don’t just require an intellectual effort. They also have real consequences. So far the banks have already paid 2.8 billion euros to the European Central Bank (ECB) as a penalty for excess liquidity, BS Markets says.
J.L.M. Campuzano (Spanish Banking Association) | Investors believe that the decision to cut UK interest rates again has only really been postponed. They also believe that it is only a matter of time before the ECB cuts the deposit rate again at the same time as it extends the deadline for asset purchases which is initially set for March 2017.
J.L.M. Campuzano (Spanish Banking Association) | The central banks really need some new arguments for extending their current expansionary monetary policy. As well as for not withdrawing some of the existing measures. The alternative is to get carried away.