Greek-held local banks are back in the game with "attractive"interests on deposits in both RON and euros in an attempt to raiseas much cash from local clients as possible, given that theincreasingly more complicated financial problems of Greece aremaking funding for Greek financial groups harder and more expensiveto find.
Greece's problems have again shaken trust on the interbankmarket, and local dealers have been instructed by their parentbanks' central offices abroad to reduce exposure to Romaniansubsidiaries of the Greeks. Which has complicated matters, forcingbanks to be more focused on clients.
While most banks have cut interest rates on deposits to 7% ayear for RON and 3% for euros, Greeks are now offering 8% a year oreven more for RON, and 4% for euros. The move goes against theoverall interest rate decline trend, induced by NBR's decision torelax the monetary policy rate and the improvement of the riskperception among foreign investors, which has made loans in foreigncurrency cheaper.
Greek-held banks' loans exceed deposits, which is especiallytrue for foreign currency loans. Whereas throughout the years oflending boom shareholders pressured local subsidiaries to boostmarket share, keeping them supplied with cheap foreign currencyfunding, now things have radically changed. Therefore local bankshave to find alternative sources to refinance the loan portfoliosgranted in the past.
Nicolae Cinteza, head of NBR's Supervisory Department, says hehas noticed this interest raise move over the last few days, whichincludes the interbank market, but stresses that the Greek-heldbanks have no capitalisation problems.
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