Gov't Rolls out Deposit Rate Cap for Institutional Investors

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Hungary's government will cap interest rates on deposits of financial companies and some private individuals at the three-month discount T-bill rate, Economic Development Minister Márton Nagy said on Monday, according to a report by state news wire MTI.

The cap will apply to bank deposits by investment companies, funds, home savings banks, insurance companies, investment funds, and private individuals with HUF 20 million or more in accounts.

Nagy said some of those parties are using commercial banks as intermediaries to place their money in central bank deposits paying interest as high as 18%, while retail banking clients get just 9-10% on their long-term deposits and under 1pc on sight deposits.

Some institutional investors are "using the situation to make the kind of profit that is unjustified in the current situation", he said.

The deposit rate cap will remain in force until March 31, 2023.

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