Trading shares of the National Bank of Belgium (NBB) was suspended on Wednesday morning by FSMA, the Belgian financial markets regulator. The decision came ahead of a publication by the European Central Bank (ECB) which the regulator said will have “a negative impact on the results of central banks in the Eurozone.”
The NBB is one of the few central banks listed on the stock market. 50% of shares are controlled by the state, while the rest are held by private shareholders and investors.
When the Brussels Stock Exchange opened on 21 September, the bank's share price plunged by more than 27% to €1,055 per share – the lowest level since 1996.
Finance ministers in Belgium and abroad fear that ECB interest rates (up 75 basis points in recent months) will affect the stability of key European central banks. The Dutch central bank stated that it expects €9 billion in losses in 2023-2026 as a result of ECB interest rate hikes.
Suffocated by interest rates
Similarly, the NBB now expects to finish the year with a loss, although it has yet to specify how much. This is the first time in 70 years that the NBB has announced losses.
Last year, the NBB made €355 million in profit on the back of attractive negative interest rates from the ECB. But with rates now rising rapidly, national banks are finding it harder to access affordable capital. Interest charges are now also rising faster than incomes.
Since the end of the ECB’s negative deposit facility in July, the NBB is unable to charge interest on the billions of cash savings that Belgian banks have invested with it. Worse still, since 14 September, the NBB has been forced to pay 0.75% interest on these deposits.
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The NBB’s outlook for assets is generally more positive. Yields on bonds are rising as maturing bonds are replaced by new securities at higher rates. Nevertheless, this is still not enough to help the national bank’s ailing finances, which are suffering under asphyxiating European monetary policy.
Complicated finances at the NBB will ultimately impact dividend payments to the Belgian Federal Government. The NBB warns that it cannot “be determined at this stage whether the dividend for the financial year 2022 will be affected.”
In 2021, the payment of dividends from the NBB contributed €122.5 million to the Federal budget.