A new of wave of ROL interest rate cutting has swept the banking market during the early stages of the month. Seven different players - from the Romanian Savings Bank (CEC) to HVB Bank - have so far cut the rates they pay to depositors.
CEC, the fourth bank in the Romanian banking system and one of the most important players on the retail market due to holding around one third of Romanians'' savings in deposits, has cut its interest rates by up to one percent. Its rates now range between 7.5 and 8% per annum, a level lower than the rate of inflation at the end of February of 8.9%.
Despite its image as a savings bank, CEC is no longer able to offer competitive rates to its clients due to more than 80% of its assets being made up of placements with the NBR and in government securities, which pay such low levels of interest that they were impossible to anticipate when the bank devised its budget for this year. Consequently CEC made losses after obtaining some 7% in interest from the central bank but having to pay out 8-9% to depositors and having no other quick option available to balance its budget than drastically cutting its rates ahead of its main competitors - BCR, BRD and Raiffeisen.
At the same time, CEC has no choice but to speed up its expansion on the lending segment by charging rates below the market level, though still higher than what it gets from the central bank and government securities. Unfortunately, CEC''s credit offers are not well known by the public, precisely because of its being perceived as a savings bank.
With the new cut in its deposit rate, CEC is continuing to offer the lowest rates among top players on the retail market.
HVB Bank, the seventh bank in the system in terms of assets and a major player on the corporate market, has cut its rates by an average of one percentage point. It now pays 5.5-6% per annum to both individual and corporate clients, despite its stated aspirations of having a say in the retail market.
At the same time, the bank upped the rates it pays on deposits in dollars. In fact, several banks have announced higher rates for deposits in foreign currency due to trends on international markets and the higher needs for foreign currency amid increasing appetite for foreign currency loans.
Others banks that joined in the rate-cutting trend included Eurom Bank, RoBank, Piraeus Bank, Libra Bank and San Paolo IMI Bank. Last week also saw Raiffeisen Bank and ING Bank cut their rates on ROL deposits by about one percent.
Moves of this kind are unavoidable, dealers say, given that rates on the monetary market are staying at 5-7%, the rates offered by the central bank and the Finance Ministry are falling, and that lending growth cannot be forced for the sake of higher yields.
liviu.chiru@zf.ro ; razvan.voican@zf.ro
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