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  • ---Will Banks Start Charging For Deposits? [View instapost]
    Banks need to maintain a minimum of about 3% in net interest margins (the difference between the average loan rate and the average deposit rate) in order to survive. Ideally, banks would like to increase the loan rates in order to increase their net interest margins, but in the current economy when lending is soft, they can’t. Thus, if banks lose the subsidy of 0.25% on reserve from the Fed, they will have to decrease expenses, which mean even lower or negative interest rates on deposits.

    Dan Geller, Ph.D.
    Executive Vice President
    Market Rates Insight
    Dec 6, 2013. 03:16 PM | Likes Like |Link to Comment
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