Published: December 01 2023
In a recent announcement by the Ministry of Economic Development, the deposit interest rate stop for companies in Budapest has been extended until April 2023. This means that companies will no longer be able to earn high interest rates on their deposits in the central bank.
Extension of Deposit Interest Rate Stop
The Hungarian government has decided to extend the deposit interest rate stop for companies, following the extension of the interest rate stop for loans. This decision comes as no surprise, as the government aims to prevent private banking clients and institutional investors from accessing the high benchmark interest rate set by the central bank. Previously, the deposit interest rate stop only applied to private clients and institutional investors, but now it will also include corporate deposits without any limit on the amount.
Impact on Companies
This extension of the deposit interest rate stop will have a significant impact on companies, as their deposits have significantly increased in recent years. With a deposit balance of over 6,000 billion forints, companies will no longer be able to earn high interest rates on their funds deposited in banks. Previously, companies could benefit from the high interest rates set by the central bank through their banking institutions.
Measures to Mitigate the Impact
As a result of the deposit interest rate stop, affected clients and their deposits will not be eligible for higher deposit interest rates than the average yield of the 3-month Discount Treasury Bill (DKJ) auctions.
Conclusion
The extension of the deposit interest rate stop for companies in Budapest aims to regulate the interest rates companies can earn on their deposits and prevent them from exploiting high benchmark interest rates. This decision will have a significant impact on companies with large deposit balances and will promote a more balanced financial environment.
Questions & Answers
What is the deposit interest rate stop for companies in Budapest? The deposit interest rate stop for companies in Budapest is a measure that prevents companies from parking their funds at the central bank at high interest rates.
When will the deposit interest rate stop be extended until? The deposit interest rate stop for companies will be extended until April 1, 2023.
Why was the deposit interest rate stop extended for companies in Budapest? The extension of the deposit interest rate stop for companies is aimed at preventing private banking clients and certain institutional investors from accessing the high benchmark interest rate set by the central bank.
Is there a limit to the amount of deposits covered by the deposit interest rate stop for companies? No, the deposit interest rate stop for companies has been extended without a limit on the amount of deposits covered.
Was the deposit interest rate stop previously applicable to corporate deposits in Budapest? No, until now, the deposit interest rate stop was not applicable to corporate deposits. However, with the recent extension, the stop will also apply to corporate deposits.
How much has the deposit portfolio of companies in Budapest grown? The deposit portfolio of companies in Budapest has grown from around 2,000 billion to over 6,000 billion since 2021.
What is the purpose of the deposit interest rate stop for companies in Budapest? The deposit interest rate stop for companies aims to prevent companies from earning high interest rates on their deposits at the central bank and encourages them to invest and stimulate the economy instead.
Does the deposit interest rate stop for companies in Budapest affect individual investors? No, the deposit interest rate stop for companies does not affect individual investors. It only applies to corporate deposits.
