Banks earn big from negative deposit rates

Faroese banks earned DKK 66 million from negative rates on customer deposits in 2021, according to the Landsbankin national bank.

In the first half of this year, bank customers paid DKK 35 million in negative deposit rates. This amounts to more than DKK 100 million in the past 18 months.

Faroese banks started charging negative interest rates on customer deposits in the latter half of 2019 after the national bank’s deposit rates turned negative.

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The four Faroese banks – BankNordik, Betri, Suðuroyar Sparikassi and Norðoyar Sparikassi – recently announced that they are increasing their deposit and lending rates as a result of the current inflation situation.

Households and businesses will be feeling the impact of these interest rate hikes, especially those with high levels of debt, says Landsbankin.

Read the Faroese version of this article here.

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