Banks need to reach minimum liquidity coverage ratio of 60% by June

PETALING JAYA: The latest ruling by Bank Negara that Malaysian banks will need to reach a minimum liquidity coverage ratio (LCR) of 60% by June has stirred up competition for retail and fixed deposits.

“This has stirred up competition for retail (and fixed) deposits, as these carry lower run-off rates for the calculation of LCR and will help banks to increase their LCR. The consequence is an increase in banks’ cost of funds, aggravating the margin contraction when lending yields are still falling,” CIMB Research said in a report dated April 3.