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Euribor rise will not immediately reflect into new loan costs, bankers say

Autor: Ciprian Botea

18.04.2011, 23:45 19

Foreign currency loans will not become more expensive on shortterm on the rising Euribor indicator as the falling country riskallows banks to borrow more cheaply from abroad.

The latest offers on the market show banks have in fact room tocut interest margins as country risk is dwindling.

Not last, bankers cannot ignore costs related to minimummandatory foreign currency reserves halved from 40% in 2009 to 20%at present.

"Expectations regarding the dynamics of Euribor interest ratesthis year point to an upward trend. In Romania's case, the riskpremium may fall further, offsetting the Euribor increase,"considers Radu Topliceanu, a retail executive manager withRaiffeisen Bank.

Bankers may be forced to cut prices on tightening competition,highly visible in the case of refinancing loans.

Competition is likely to drive loan interest rates downward,especially as there are no signs individuals' loan demand ispicking up.

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