The interests on RON loans have barely gone down, due to pressure from the NBR, which blocked the foreign currency lending and cut the interest at which commercial banks can invest their liquidity surplus to 1%, that bankers are starting to talk about interest raising prospects.
Rates on RON loans will increase again as of next year because the banks that are now operating dumping prices will not have sustainable resources to finance such cheap loans in time, says Nicolae Danila, Banca Comerciala Romana chairman.
"More and more banks have found themselves prevented from providing loans in foreign currency and therefore are throwing RON loans on the market almost at any cost. It is obvious they cannot go on like this for long, considering there are no streams of funding in RON for medium and long term," Danila stated.
He explains that in Hungary, for instance, where the inflation is visibly lower than in Romania, interests on loans in domestic currency are somewhere at 11-12% a year.
Petre Bunescu, BRD-SocGen vice-president, believes that the current interest decline trend cannot be sustained, particularly for deposits, with an "unavoidable rebound" therefore expected.
Faced with the halt of the lending in foreign currency in the past four weeks, many banks have engaged in a race to cut interests on RON loans. Given the insufficient demand for funding in domestic currency, the banks did not think twice before sacrificing interests on loans to be able to make lending in RON even cheaper, of 7-8% a year, without relinquishing their substantial margins, though.
"It is not acceptable to maintain such a large spread between the interests paid by banks and those collected, as if nailed down. Regardless of whether the benchmark interest goes up or down, this gap remains incredible, of approximately 13%," presidential advisor Theodor Stolojan was recently commenting.
While slashing interests on deposits, bankers are expecting a sign from the NBR. "The current circumstances cannot last for too long, and the interest raising signal cannot come from anyone other than the central bank," believes Mihai Bogza, the chairman of Bancpost.
"We are expecting interest levels to be reset in five to six months. Although we are actively promoting loans in RON at low interests, we are seeing reluctance from our corporate clients that fear that the benchmark interests to which the cost of loans can be tied to are much too volatile. We cannot offer fixed interests for even at least 1 or 2 years, and have no funding resources for medium and long term," says Dan Pascariu, the chairman of HVB Bank and vice-chairman of the Romanian Association of Banks (ARB).
He says that through the steps taken to block the foreign currency lending, the NBR only managed to introduce a risk for long-term loans in RON, given that banks do not have suitable refinancing.
"I hope this anomaly of interests below inflation will not persist. The phenomenon of foreign currency inflows as a result of the deregulation of the capital account has flattened so that I do not think we need to put our depositors in the position of subsidising low rates on RON loans for long, by having them accepting rates for their savings that are no longer yielding any real gains," Petre Bunescu, BRD-SocGen"s vice-president commented.
razvan.voican@zf.ro
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