After several months of decline in interests for the deposits attracted from the population, the banks are now gathering their courage to lower interests on credits, as well. However, the interest reduction pace is not the same, as the banks are trying to cling on to several interest percentage points from individuals and corporates.
This decline is important for the banks, as they operate with large amounts of money. On the other hand, several percentage points off an interest means very little to an economic operator.
Banca Comerciala Romana (Romanian Commercial Bank-BCR) gave the lead to a more significant decline in active interests (that is interests charged by banks for credits), cutting the interests on loans by three percentage points, from 44-48% to 41-45% a year yesterday.
Given the response of the market, it is only expectable that other banks would start lowering interests on loans, following the lead of the major operators. The banks offer only 32-36% interest for deposits attracted.
"The trend of the interests for credits and deposits in ROL will be a downward one, as a result of the general interest downward trend and of the cash flows generated by possible decrease of the minimal compulsory reserves the banks have to make with NBR," Radu Gratian Ghetea, chairman of the Romanian Association of Banks and first vice-president of Alpha Bank Romania, said.
The minimal compulsory reserves going down from 30% to 27.5% will mean a higher amount of ROL a bank will have to place somewhere. And there is not plenty of opportunities on the market, though.
Whereas the T-bills used to take up most of the banks' liquidity so far, because the interest was very high, now the interest for such instruments is going down, reaching 43% compared with 50% early this year.
Ghetea mentioned he was positive "the interests traded on the interbank market, trend-setting for the entire money market, will reach about 35-36% by the end of the year."
Bank dealers say NBR and Finance Ministry are trying to push interests down.
"NBR and Finance Ministry's signal is loud and clear: interests down. NBR yesterday attracted one-month deposits for 42.5% in average interest from the interbank money market, while at the end of last week it paid 44% for the same kind of deposit. I think the yields traded on the interbank market will soon decrease to less than 40%, and interests on loans will be quick to rally," Marius Stoica, head dealer of BRD-Groupe Societe Generale, the second leading bank on the Romanian market, maintained.
"The drop in interests from 50% to 45% can be seen as a joke. Its monthly outcome of this decline is "0 point", that is nothing," atefan Varfalvi, general manager of Imsat Bucharest telecommunications producer, stated. "The big problem is inflation. As long as it keeps within the current levels, banking credits are simply stifling," he added.
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