TOKYO, Jan 17 (Reuters) - Japan's MUFG Bank was charged negative interest rates on some of its deposits at the central bank in mid-December through January, the first time in six years a mega-bank was hit by the charge, the Nikkei newspaper reported on Monday.
MUFG Bank's public relations official confirmed the report when contacted by Reuters.
Under its current policy dubbed yield curve control, the Bank of Japan imposes a 0.1% interest on a portion of excess reserves financial institutions park with the central bank.
The BOJ has taken steps to limit the size of reserves for which the charge applies, as part of efforts to mitigate the damage its negative rate policy inflicts on bank profits.
While regional lenders and trust banks have been hit by the 0.1% charge, Japan's mega-banks have averted paying the interest by shifting money out of BOJ reserves into overseas loans.
The prolonged impact of the COVID-19 pandemic, however, has led to a sharp increase in the mega-banks' deposits, as firms and households saved huge cash payouts they received from the government to weather the hit from the crisis, the Nikkei said.
As a result, MUFG Bank is likely to pay the BOJ interest worth several hundreds of million yen annually, the paper said.
The average outstanding balance of excess reserves major city banks parked with the BOJ in the December reserve period, which ran from Dec. 16 to Jan. 15, stood at 181 trillion yen ($1.58 trillion), up from the previous month's 178 trillion yen, BOJ data showed on Monday.
($1 = 114.3200 yen) (Reporting by Ritsuko Shimizu and Leika Kihara; Editing by Susan Fenton)
