PRAGUE (Reuters) – The Czech central bank’s increased minimum reserve requirement from next year is likely to lead banks to lower deposit rates, the CEO of MONETA Money Bank said on Thursday.
The Czech National Bank (CNB) decided this month to double the minimum reserve requirement for banks – the proportion of liabilities banks must on average hold with the central bank – to 4% from 2%, as of next year.
The reserves are held at the CNB interest-free after policymakers last year cancelled paying interest on minimum reserves, following a similar step by the European Central Bank.
MONETA has estimated the higher requirement would cut its annual net interest income by 200-300 million crowns ($8.6-12.9 million) in 2025 and the following years. On Thursday, it kept its forecast for a net profit of 5.3 billion crowns next year.
“It will create additional pressure on deposit pricing. I reckon it will take 10-15 basis points off the pricing of deposits,” MONETA Chief Executive Tomas Spurny said on an earnings call.
He said the costs would have to “trickle down to the interest offered” on deposits, but added he did not expect such an impact in the lending market.
The CNB said its decision this month was aimed at lowering the cost of implementing monetary policy.
($1 = 23.3530 Czech crowns
(Reporting by Jason Hovet; Editing by Mark Potter)
