The root of high interests: some banks gave money without having it

The biggest problem of the banking system in the context of the crisis stemmed from the fact that some banks "gave money without having it", that is financing lines from parent companies, and once those started making them more expensive, the domestic subsidiaries raised the cost of money in the entire Romanian system, launching a very tight competition for deposits, states Shahmir Khaliq, general manager of Citibank Romania, the subsidiary of one of the world's largest financial groups.

Until the rising unemployment trend halts, he does not believe banks can be expected to revert to aggressive retail lending.

Around 85-90% of Citibank revenues come from multinationals and large Romanian companies and the rest from SMEs. However, in mid-2009 Citi started working on the project of a true retail offer, which reached the market in October, 13 years after the Americans' arrival in Romania.

"We took this step despite the crisis because we do not think short-term".

Khaliq says the retail offer primarily targets the category of managers, who do not have much time and are comfortable working with the Internet.

"(...) Our target is to use the best technological solutions to be able to provide services at the lowest costs (...)", Khaliq says.

He maintains the new business will break even in 2011, with selling more products to a client as a major goal.

Kumar Ramachandran, the head of the retail department, expects sales in the new card line launched with the retail product range to revolve around 20,000.

He says the bank has an "aggressive" budget on the consumer-banking segment for 2010.

Citi's individual client offer will include a new type of special deposit that allows clients to deposit their money in a certain currency and withdraw it in another currency at maturity. For wealthy clients with various risk appetite levels, the bank will distribute investment products of major international financial groups such as Goldman Sachs starting next year.