News, Circular 3/2017

Quotas in the system for the management of bank reserves

Under the current system for managing banks' reserves, interest is paid at the key policy rate on a certain portion of the reserves – a quota. Deposits in excess of the quota are remunerated at a lower rate – the reserve rate. Norges Bank will normally assess the total quota and its distribution among banks twice a year.

The following applies as from 2 October 2017:

  • Norges Bank will seek to maintain reserves in the banking system at an average NOK 35 billion with a symmetrical interval of ±5 billion around this level.
  • The sum of banks' quotas, the total quota, is set at NOK 45 billion.

Banks are divided into three groups where all banks in the same group are assigned the same quota, with the exception of settlement banks which are assigned higher quotas. The banks are divided into groups as follows (Table 1):

Table 1. Division of banks into groups (as of September 2017)

Group 1: Group 2: Group 3: All B-banks in NBO* (105 banks)
DNB Bank ASA** SpareBank 1 SR-Bank ASA  
Nordea Bank Norge AB (publ), filial i Norge SpareBank 1 SMN**  
Danske Bank NUF** Sparebanken Vest  
Handelsbanken NUF SpareBank 1 Østlandet  
SEB AB NUF SpareBank 1 Nord-Norge  
Swedbank NUF Sparebanken Sør  
  Skandiabanken ASA  
  Sparebanken Møre  
  Sparebanken Sogn og Fjordane  
  Sparebanken Øst  
  BNBank ASA  
  Storebrand Bank ASA  
  Sandnes Sparebank  
  BNP Paribas S.A. Norway Branch  
  Citibank Europe PLC, Norway Branch  

* Norges Bank Settlement system, ** Settlement bank

The quotas that apply as from 2 October 2017 are set on the basis of banks' total assets as at 30 June 2017. The quotas are distributed as follows (Table 2).

Table 2. Banks' quotas to be applied as from 2 October 2017. In thousands of NOK

  Sum TA Share TA Sum quota
per group
Number
baNks
Quota per bank
Group 1 3 245 022 907 65.1 % 29 297 148 6 4 900 000
Group 2 968 764 986 19.4 % 8 746 333 15 580 000
Group 3 770 520 852 15.5 % 6 956 519 105 66 000
Sum 4 984 308 745 100 % 45 000 000 126  

TA: Total assets

The settlement banks DNB, SpareBank 1 SMN and Danske Bank are assigned quotas as follows (Table 3).

Table 3. Quotas for settlement banks, DNB, SpareBank 1 SMN and Danske Bank*. In thousands of NOK

  Initial quota Supplement to quota Sum quota
DNB Bank ASA 4 900 000 1 300 000 6 200 000
SpareBank 1 SMN 580 000 610 000 1 190 000
Danske Bank 4 900 000 - 4 900 000

*Settlement banks are assigned a supplementary quota determined by the size of the settlement bank in relation to the size of the B-banks or equivalent banks for which it executes settlements (as measured by total assets). If the estimated quota for the settlement bank is initially NOK K billion, its total assets NOK X billion and the sum of total assets of the B-banks is NOK Y billion, the settlement bank will be assigned a supplementary quota equal to K x (Y/X), but with an upper limit equal to the sum of the quotas for the B-banks for which it executes settlements. The settlement bank's total quota will normally be equal to K+K x (Y/X).

For a further description of the system for the management of bank reserves, see "Management of bank reserves: The system in Norway".

For a further discussion of the background for the new system, see Background for the system for the management of bank reserves in Norway.

Published 1 September 2017 10:00