Response to consultation on draft Guidelines on retail deposits subject to different outflows for purposes of liquidity reporting

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Do you agree with this criterion for identifying a transactional account?

Transactions (such as salary, mortgage payments, credit card payments, any other comparable periodical income and transactions, etc.) which are regularly credited and debited to an account significantly decrease the probability of a withdrawal or closing of such accounts thus making this type of account a ‘transactional account’.

Regarding established relationships, how would you assess that the contractual relationship with the institution and the minimum number of products are active in the sense of being actively managed?

It depends on the depth of the institution; client relationship is hardly uniform across various markets. However, the following indicators should generally point to ‘actively managed accounts/relationships’:
• The client has a ‘bundle’ of products (e.g. savings, transactional account, mortgage, credit cards, etc.)
• Client has a history of inflows/outflows to/from its savings/transaction account

What is your view concerning the threshold proposed for high and very high value deposits? Please give your reasons.

In our view, deposits between EUR 100.000 (or local DGS) and EUR 1 Mio should be seen as high, and deposits above EUR 1 Mio should be considered as very high. When considering the value of client’s deposit, all of a client’s deposit accounts with the institution (or group) should be taken into account.

Do you agree with the criterion for considering a deposit to be rate driven?

The proposed criteria, although logical, are also very complex and somewhat ambiguous. The concept of ‘average rate for similar products offered by peers’ is a very hard one to define and can be subject to multiple interpretations. This weak definition could lead to heterogeneous measurement practices across markets and institutions, which cannot be aligned with a level playing field approach. Hence simpler criteria (such as a fixed threshold or a threshold that depends on official rates plus a fixed spread) should be considered and tested.

Do you agree with the criteria to identify this risk factor?

Residency factor, although plausible, is not necessarily an indicator of the higher withdrawal rates. Researches could not find non-resident deposits to be highly correlated with higher levels of withdrawals. In our opinion, EU and non-EU residency does not necessarily mean that the deposit is likely to be withdrawn or not. For example, during ‘Cyprus crisis’, depositors from EU and from outside EU were equally eager to withdraw their deposits. In a market wide or institution specific stress situation, deposit outflow is highly dependent on client’s confidence; hence institution related characteristics, like business model, credit rating, local, regional and global significance, should have more weight on deposit outflow than residence.

Do you agree with the above analysis of the cost and benefit impact of the proposals?

It is mentioned at EBA’s impact analysis that additional resource requirements following these proposals will be substantial for the institutions. Implementation of proposed systems and indicators will require significant efforts, from manpower to business model changes. The cost-benefit ratio for the additional measuring of higher outflow rates cannot be estimated in a serious manner at this stage. But it should be recognized that initial costs as well as running costs are substantial and any regulatory condition should be defined while considering this aspect.

Name of organisation

Austrian Federal Economic Chamber - Division Bank and Insurance