Norges Bank

Circular 2/2016

Quotas in the system for the management of bank reserves

[NOT IN FORCE]

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 1 April 2016:

  • 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 March 2016)

Group 1: Group 2: Group 3: All B-banks in
NBO* (107 banks)
 DNB Bank ASA** Sparebank 1 SR Bank  
Nordea Bank Norge ASA  Sparebanken Vest  
Danske Bank NUF** Sparebank 1 SMN**   
Handelsbanken NUF Sparebank 1 Nord-Norge   
SEB AB NUF  Sparebanken Hedmark   
Swedbank NUF Sparebanken Møre   
  Storebrand Bank ASA   
  Sparebanken Sør   
  BNP Paribas Fortis SA-NV
Norway Branch 
 
  BN Bank ASA  
  Skandiabanken ASA  
  Bank 1 Oslo Akershus   
  Sandnes Sparebank   
  Sparebanken Øst   
  Citibank NUF   
  Sparebanken Sogn og Fjordane   

* Norges Bank's settlement system, **Settlement bank

The quotas that apply as from 1 April 2016 are set on the basis of banks' total assets as at 31 December 2015. The quotas are distributed as follows (Table 2):

Table 2. Banks' quotas to be applied as from 1 April 2016. In thousands of NOK

  Sum TA Share TA Sum quota per
group
Number banks Quota per
bank
Group 1 3 183 546 553 67.2%  30 220 476  6  5 000 000
Group 2 915 526 717 19.3% 8 690 827  16 540 000 
Group 3 641 407 806 13.5% 6 088 697  107 57 000 
Sum 4 740 481 076 100% 45 000 000  129  

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   5 000 000 1 200 000  6 200 000 
SpareBank 1 SMN  540 000  570 000  1 110 000 
Danske Bank  5 000 000  100 000  5 100 000 

*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 March 2016 10:00