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Corporate deposit rates drop to -0.04% in April

02/06/2022 15:17

Interest rates for corporates deposits in the Cypriot banking system dropped further in negative territory in April, after commercial banks started charging corporate deposits in March for the first time-ever.

According to data published by the Central Bank of Cyprus, the interest rates for corporate deposits with agreed maturity up to one year dropped to -0.04% from -0.01% in the previous month. That means businesses have to pay the banks for depositing their cash.

Interest rates for household deposits with one year maturity remained unchanged at 0.05% in April, which is the historically lowest ever according to the Central Bank data.

Hit by negative interest rates charged by the European Central Bank, Cypriot banks began charging corporate deposits since 2020, while some banks were contemplating even charging household deposits over €100,000. Cypriot banks which hold abundant liquidity are charged with -0.05% by the ECB.

However, negative interest rates are coming closer to an end, as the ECB is expected to begin hiking its basic rates in July in a bid to contain inflation in the euro area which spiked to historically high levels following the exit from the Covid-19 pandemic and the war in Ukraine. ECB President Christine Lagarde has said that the ECB may increase its basic rate to zero over above zero by September.