Insights

The Malta Financial Services Authority yesterday issued a circular addressed to credit institutions entitled ‘Imposition of Negative Interest Rates on Euro Denominated Deposits’.

The Malta Financial Services Authority in consultation with the Central Bank of Malta took the position that credit institutions are not to impose negative interest rates on Euro denominated deposits held with them by their clients, independently of the amount of such deposits held, the liquidity thereof or the type of client holding such balances.

Any credit institutions which are already imposing negative interest rates on Euro denominated accounts are to desist from this practice with immediate effect. Where clients are already subject to negative interest rates, credit institutions charging such interest rates have until 18 December 2018 to lift the negative interest rates on Euro denominated deposits of such clients.

The Circular also provides that credit institutions may, in specific circumstances, charge a maintenance fee to their clients due to possible costs incurred by the retention of excessively high liquid balances by way of client deposits. Credit institutions must inform, in writing, all clients who may be affected by the credit institution’s decision to impose a maintenance fee, no later than 2 months before the proposed date of the imposition of such fee and must include such a fee in its list of tariffs or charges.

The Circular can be found here.