Has lending in RON become spectacularly cheaper? No. Despite recommendations and pressures from the NBR, the average interest for the various funding products for individual customers remains at more than 18% a year, and at over 16% a year for corporate clients.
These are about the prices the clients of the banks that will need money will have to pay as of September 26, when the National Bank will lock up foreign currency lending.
The reason? A new set of guidelines enforces in one week, whereby the NBR says the commercial banks will no longer be allowed to grant foreign currency loans beyond three times their own funds. Most of the banks are already above this ceiling, which means they will not only stop lending in foreign currency but also need a grace period and maybe capital increases to adjust to the drastic regime imposed by the central bank.
This is true for both the top tier banks, where the only bank of those with the largest volumes of non-governmental foreign currency loans that can continue to grant such loans and still meet the 300% cap is Banca Comerciala Romana and the smaller banks, which saw their assets increase precisely because of the expansion of the foreign currency lending.
As usual, it is the customers that stand to lose in this game. The banks will most likely take advantage of the pressure of the demand for loans that will be forced to shift from foreign currency to RON, to charge interests that remain very high. At present, the rates of the loans in RON for individuals range from 9.5% (mortgage loans with fixed interest in the first few years) and 25% (average interest on the credit cards), so that the average interest stands at 17-19% a year that is up to 10% above the interests on the loans in euros.
None of the major retail banks has announced any significant cut in the interests on loans over the last few months. On the other hand, the average interest on the deposits in RON has fallen to even less than 6% a year. Under the circumstances, even though they can expect lending growth to slow down, the banks are taking advantage of this situation to preserve their profit margins at 13-14%.
The interests on the loans in RON did not go down even after the NBR changed its intervention policy on the monetary market, refusing the purge the excess liquidity in RON. Even though it upped the nominal intervention rate from 8% to 8.5%, saying this was its way of encouraging commercial banks to reward deposits better to protect savings, NBR went as far as to no longer attract even a single RON from the market, forcing banks to use the overnight deposit facility, which pays 4%. Therefore banks were actually encouraged to cut their deposit rates in their turn, down to levels that are no longer sufficient to cover the inflation.
Under the circumstances, the interbank monetary market provides a picture that is completely out of synch with what is actually going on between banks and their customers: last week, the rate for one week deposits fell to an all time low of 1%. At the same time, the minimum rate for the three-month deposit certificates of the NBR fell to another low of 6.19% and the rate on the public bonds for three years fell to an all time low of 6.47% a year. And all this time interests on RON loans remained perked up at 17-18% a year.
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