A new banking law amendment, passed yesterday by the lower house of Parliament, reduces the deposit insurance fee paid by banks, from 0.3% to 0.1% of deposits. If approved by the Senate and signed by the president, it would become effective this year. We estimate that KB’s insurance costs could fall by some CZK 0.6 bil. per annum (i.e., a saving of some CZK 15 per share, pre tax). With Ceska sporitelna, the positive effect would be moderated by the fact that it would have to pay an insurance fee for its special savings-book product (thus far not subject to insurance fees). We estimate the net positive effect on CS at around CZK 0.4 bil. per annum (some CZK 3 per share). The banks might pass the benefit to customer by raising deposit rates, in which case the banks’ savings would be lesser. Positive news.
(Ondrej Datka)