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Romanian Bks To First Cut Interest Rates For Deposits, Then For Loans –Ctrl Bker

The Romanian banks will first of all cut the interest rates at deposits and then those at loans, following central bank’s decision to cut the key monetary policy rate, Adrian Vasilescu, advisor of BNR governor said Thursday.
Romanian Bks To First Cut Interest Rates For Deposits, Then For Loans –Ctrl Bker
07 mai 2009, 12:31, English

"The first reaction of the banks is to cut interest rates for deposits. The bank is a money store. (…) For a bank it is very important to first set a purchase price and then a sale one. It is a matter of weight. It is true the banks take care to keep a big difference between the two prices," Vasilescu said.

In his turn, Radu Gratian Gheţta, president of the  Romanian Banks Association (ARB) said that as a reuslt of the measures and facts over the last period, banks should normally start cutting interest rates for deposits and then loans.

"We have a confirmation upon the setting up of an agreement with IMF. BNR could release the money from the minimum required reserves and the Finance Ministry would not be as active in attracting money from the interbank market," Ghetea said.

In lack of high interest rates for deposits, money will be cheaper and interest rates for loans will be lower.

"I am very convinced, and this is my personal opinion that I believe many bankers agree with, the interest rates will be lower in this case scenario. We will see no TV ads with high interest rates, and we will see then the interest rates for loans will diminish,” Ghetea added.

Romanian central bank BNR cut Wednesday the key monetary policy rate by 0.5 percentage points to 9.5%, and kept the minimum required reserves ratios unchanged.

The central bank’s Board decided Wednesday to keep the minimum required reserves ratio on both leu-denominated and foreign currencies liabilities of credit institutions at 18%, and 40%, respectively.

March 31, BNR’s Board has cut to zero the minimum reserve ratios on foreign-denominated liabilities with residual maturities of over two years, starting with the May 24-June 23 maintenance period.

The new key rate will be applied starting with May 7, the bank also said.