MADRID Recent interest rate hikes by the European Central Bank should be fully transmitted to savers and reflected in higher deposit rates, ECB Vice-President Luis de Guindos said on Thursday.

"A full transmission (of monetary policy) requires the remuneration of savings," De Guindos told a financial event in the northern Spanish city of Santander.

"It is very important that monetary policy is... reflected in all assets and liabilities of a bank", he said.

De Guindos did not specifically comment on the situation in Spain, where banks offer the lowest household deposit rates among the euro zone's large economies.

Banks in Spain offered on average a return on one-year deposits of 1.33% in April, compared to 2.27% in the euro zone as a whole.

Last week the ECB raised its key interest rate by another quarter of a percentage point, increasing the cost of variable mortgage loans, which make up the vast majority of contracts in Spain.

Spanish banks on Tuesday however pushed back against a government call to start paying higher rates on deposits.

Lenders maintain that a lower deposit rate is partly the result of excess liquidity in the sector and deny claims of a lack of competition in Spain's relatively concentrated banking sector.

Ratings agency DBRS said this month that Spanish banks would be pressured to raise deposit rates in the coming quarters as liquidity would deteriorate after the bulk of lenders repaid their outstanding cheap funding lines, known as TLTROs, in June.

The six Madrid-listed banks which took up on more than 265 billion euros in TLTROs-III are now planning to repay or let expire around 42 billion euros at the next central bank window on June 28, sources with knowledge of the matter have told Reuters.

This would leave them with around 40 billion euros of those funding lines at the ECB.

(Reporting by Jesús Aguado; Editing by Jan Harvey)