Many US banks want to curb Fed balances

Of those wanting to shrink excess reserves, a large percentage cite fears over net interest margins

Almost half of banks polled by the Federal Reserve said they’d try to curb their excess reserve balances by year-end, out of fear for their withering net interest margins (NIM) in the current low-rate environment.

Of 80 banks surveyed by the Fed in September, 37 said they planned to “take actions to reduce either the level or growth in [their] reserve balances” by December. Five banks aspired to cut reserves by 50%, and 21 between 6% and 50%.

Of these 37 lenders, 30% said the most important