Bank of Valletta, Malta’s largest bank, has confirmed that it will no longer be offering its fixed deposit facility

Fixed, or term, deposits are accounts that hold customers’ money for a definite period of time at a higher rate of return than that offered by the bank’s savings or current account facilities, from which the customer can withdraw at any time. BOV previously offered fixed deposit accounts for periods of 1, 2, 3, 4 and 5 years.

Last year, the bank slashed the rates it offers on such accounts. 

This month, BOV customers with fixed accounts received letters explaining that banks are today incurring negative interest rate costs on client deposits that are placed with other financial institutions.

“To date, BOV has been absorbing this cost, however, this is not a sustainable situation.”

The letter continued: “Instead of passing on these costs to our customers, we’ve decided to make the difficult decision to withdraw this type of account and instead work on providing you with better and more cost-effective products and services.

As a result, with effect from 1st January 2022, the bank has decided to withdraw term deposit accounts from its product catalogue.

BOV will continue to honour existing term deposit accounts until their maturity date. Once the term account matures, proceeds will be transferred to an account of the customer’s choice.

In this regard, the bank is communicating directly with each and every term deposit account holder.

A BOV spokesperson told WhosWho.mt that the bank is instead providing its customers with a suite of alternative investment product and service solutions to reflect their stage of the lifecycle goals, and encouraged customers to set up a meeting with the bank’s banking specialists located at their preferred BOV branch or investment centre.

Europe has been experiencing historic low rates of interest as the European Central Bank's benchmark interest rate remains around zero per cent while it flushes the economy with cheap money through quantitative easing. The mechanism was launched in response to the financial and sovereign debt crises, and ramped up in the face of the economic fallout from the COVID-19.

The Federal Reserve, the United States' central banking system, has followed a similar plan of action, with almost a fifth of all US dollars printed in 2020 alone.