Norges Bank

Circular 1/2020

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 1 April 2020:

  • 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 February 2020) 

Group 1:

Group 2:

Group 3: All B-banks in NBO* (102 banks)

DNB Bank ASA**

SpareBank 1 SR-Bank ASA

 

Nordea Bank Norge Abp, filial i Norge

SpareBank 1 SMN**

 

Danske Bank**

Sparebanken Vest

 

Handelsbanken

SpareBank 1 Østlandet

 

Skandinaviska Enskilda Banken AB (publ) Oslofilialen

SpareBank 1 Nord-Norge

 

Swedbank Norge

Sparebanken Sør

 

 

Sbanken 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 1 April 2020 are set on the basis of banks’ total assets as at 31 December 2019. The quotas are distributed as follows (Table 2).

Table 2. Banks’ quotas to be applied as from 1 April 2020. In thousands of NOK

 

Sum TA

Share TA

Sum quota per group

Number banks

Quota per bank

Group 1

3 522 701 274

64,0 %

28 814 060

6

4 800 000

Group 2

1 088 979 088

19,8 %

8 907 343

15

590 000

Group 3

 889 854 530

16,2 %

7 278 597

102

71 000

Sum

5 501 534 892

100 %

45 000 000

123

 

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

4 800 000

1 400 000

6 200 000

SpareBank 1 SMN

590 000

650 000

1 240 000

Danske Bank

4 800 000

100 000

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 2 March 2020 10:00