Account remuneration through automated overnight deposits
There is a three-tier remuneration of accounts: tier 1 investment, tier 2 investment and excess balances.
Tier 1 investment
For the tier one overnight investment, the higher rate applies: the euro short-term rate (€STR) or the interest rate on the Eurosystem’s deposit facility. In the event that €STR should be discontinued, the Eurosystem’s deposit facility shall apply.
If the interest rate on the Eurosystem’s deposit facility is below 0% p.a., as it is currently, the Bundesbank levies a fee on balances that have not been invested (excess balances) at the current interest rate on the Eurosystem’s deposit facility minus 15 basis points.
Tier 2 investment
We offer overnight deposits at selected credit institutions to further increase the average remuneration of our customers’ accounts. The Bundesbank acts in this context as an agent. The amount of this tier 2 investment is customer-specific. Tier 2 investments are remunerated at the actual average rate of interest on investments less a margin of 5 basis points. In the best interest of our customers, we naturally forgo an investment if the available market rate would make the investment not economically viable. We select only banks with a high credit rating as our counterparties.
If the deposit facility rate is negative, remuneration of any balances exceeding the tier 1 and tier 2 investment will be at the deposit facility rate less 15 basis points. If the deposit facility rate is equal to or above 0%, no interest will be paid on such account balances.
For more information, please refer to Product Annex Basic Services, section I, as well as Product Annex Investment Services, sections I and III.