A new deposit insurance fee calculation this year may push bank retail deposits even higher, one research firm predicted.
Retail deposits now make up 80% of total bank liabilities, according to data from Market Rates Insight. Competition could intensify when a provision in the Dodd-Frank Wall Street Reform and Consumer Protection Act that includes non-deposit liabilities in the base for calculating insurance fees goes into effect mid-year.
The new measure is expected to intensify the competition for retail deposit among institutions because those with a relatively large amount of non-deposits liabilities will see a significant increase in their insurance fees, and therefore will strive to acquire more liquidity through retail deposits, according to MRI.
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