Response to consultation on draft Guidelines on retail deposits subject to different outflows for purposes of liquidity reporting
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We suggest reformulating it in way “…salaries or transactions…” The reason is a client might use account for regular expenses even without regular salary payments. In addition salaries are difficult to identify, especially for freelancers.
We suggest the transactional account should always be treated as stable up to the value of local deposit guarantee scheme.
In CP there is stated the high and very high value deposits are placed based on investment criteria – therefore yield and confidence. The yield based classification is described in “rate-driven products”. For the purpose of confidence it is sufficient to distinguish between deposits covered and not covered by the local guarantee scheme.
We propose to only distinct between deposits covered and not covered by the deposits guarantee scheme.
High-risk distribution channels, including Internet-only access and brokered deposits
We disagree with this risk factor. There is no evidence of withdrawals that could support the assumptions stated. What is a difference between internet-only access account and both internet and branch access account? A client can withdraw the money equally from both accounts.
The CP proposed three more buckets with higher outflow rates then 10% non-stable deposits. Those outflow rates shall be calculated by the institution itself.
By this step LCR ratio loses its greatest advantage – comparability of the banks’ liquidity situation. LCR ratio as a part of regular public reports should bring more confidence in banking sector. By making it complicated and incomparable the LCR becomes useless. For the purpose of liquidity risk management institutions use more sophisticated measures.
Do you agree with this criterion for identifying a transactional account?
We disagree. In CP transactional account is defined: “A retail deposit should be considered as being held in a transactional account when salaries and transactions are regularly credited and debited respectively against that account.”We suggest reformulating it in way “…salaries or transactions…” The reason is a client might use account for regular expenses even without regular salary payments. In addition salaries are difficult to identify, especially for freelancers.
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?
NAWhat is your view concerning the threshold proposed for high and very high value deposits? Please give your reasons.
We disagree with the proposed calculation. In CP there is suggested to include all client’s account deposits to calculate the high value deposits. Let us consider a wealthy client with total deposits 500 000 EUR. Consider he has one transactional account used for everyday living expenses. And another accounts (saving accounts, term accounts) for the rest of his fortune. There is no economic reason to assume the wealthy client will withdraw all of his money even from the transactional account in comparison to other client who has only transactional account.We suggest the transactional account should always be treated as stable up to the value of local deposit guarantee scheme.
In CP there is stated the high and very high value deposits are placed based on investment criteria – therefore yield and confidence. The yield based classification is described in “rate-driven products”. For the purpose of confidence it is sufficient to distinguish between deposits covered and not covered by the local guarantee scheme.
We propose to only distinct between deposits covered and not covered by the deposits guarantee scheme.
Do you agree with the criterion for considering a deposit to be rate driven?
Yes, we agree.High-risk distribution channels, including Internet-only access and brokered deposits
We disagree with this risk factor. There is no evidence of withdrawals that could support the assumptions stated. What is a difference between internet-only access account and both internet and branch access account? A client can withdraw the money equally from both accounts.
The CP proposed three more buckets with higher outflow rates then 10% non-stable deposits. Those outflow rates shall be calculated by the institution itself.
By this step LCR ratio loses its greatest advantage – comparability of the banks’ liquidity situation. LCR ratio as a part of regular public reports should bring more confidence in banking sector. By making it complicated and incomparable the LCR becomes useless. For the purpose of liquidity risk management institutions use more sophisticated measures.