Isarescu asks bankers to cut interests

The gap between the interests charged by banks for loans in RON, 14-19% per annum and the key rate of the National Bank, 8%, is huge, Governor Mugur Isarescu said. This is the first time he has ever criticised banks openly for their too high interests. Bankers, however, continue to say that interests cannot go down unless stimulated by the NBR.
"The interests are still very high. This is an invitation to commercial banks to lower their interests. I saw some of my honourable colleagues telling newspapers that they would no longer cut interests because we did not do it, either. There is a huge gap from 14-19% they charge to the normal level," Isarescu said on Friday during the conference where the Third Quarter Inflation Report was presented.
The Governor explained that the active interests (charged by banks from customers for loans granted i.e.) should be one to three percent above the key rate. Therefore starting from NBR's 8% per annum, the interests on loans in RON granted to customers should not go beyond 11% per annum. As for deposits, interests should be below NBR's key rate. "This should be the normal situation. Unfortunately, we are not there yet. It's just what I've noticed and I will say that we cannot act using anything other than market instruments. We are still at a stage when banks are seeing high risks, uncertainty, political uncertainty included. "
The average interest for new loans granted to individuals stood at almost 18% per annum. In case of companies, the average interest reached 15.69% per annum, according to the latest NBR data.
Bankers, however, say that given the current circumstances, they cannot lower rates.
"The banks had already cut interest rates in various stages, and the key rate has not changed. I don't see any interest cuts any time soon because the conditions are not right for it. The risk remains high and banks have to think of covering it," says Petre Bunescu, deputy general manager in charge of risk management at BRD-SocGen.