Whether we are talking about Greek-held banks affected by thedifficult situation in Greece, or about Romanian-controlled banks,there are many offers of 4% interest rates a year on euro deposits,which is a surprise for the NBR governor.
Very few banks - if any - can secure the necessary amount ofresources in euros from the Romanian market, which has generatedcompetition over interest rates on euro-denominated deposits, saysDominic Bruynseels, CEO of BCR.
"Interest rates are high on euro deposits because financing needscannot be covered locally, banks need to also borrow from parentbanks, bearing the cost of the country risk. "In 2009 the BCR tookout a subordinated loan worth 120 million euros with an interestrate consisting of six-month EURIBOR plus 4.2%, which matures in2016.
NBR governor Mugur Isărescu declared himself "very surprised" atthe "excessive" interest rates that local banks offer onforeign-currency deposits, saying there are banks that pay 4-5% ayear, while in the eurozone "you barely get 1% on any foreigncurrency deposit."
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