ECB decision costs German banks 1.7 billion euros

2023-07-30 12:44:59

Sunset behind the European Central Bank

The central bank’s decision on interest payments on mandatory deposits surprised many financial institutions. Deutsche Bank criticized the decision.

(Foto: imago images/imagebroker)

Frankfurt The latest decisions by the European Central Bank (ECB) are a double-edged sword for the banks: on the one hand, the interest rate hike that has been decided offers them the opportunity to earn more money with deposits and loans. On the other hand, the central bank made a decision that caused financial institutions to lose billions in revenue.

This is about the so-called minimum reserve, which institutes have to park with their national central banks. Unlike in the past, the banks will no longer receive any interest on these. On an annual basis, the financial institutions are missing out on income of 6.2 billion euros.

The German banks are particularly badly affected. Of the 165 billion euros that European financial institutions have deposited with their national central banks as minimum reserves, 45 billion euros are accounted for by German financial institutions.

This means that German banks are losing 1.7 billion euros per year – compared to the deposit rate of 3.75 percent that the central bank will pay on all deposits in excess of this from September.

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