Romanian Banks Hiked Deposit Rates Faster Than Lending Rates – Ctrl Bker

"Banks have changed their behavior. Last year, when the central bank upped the key rate, banks hardly changed interests for deposits and went straight for higher interests on loans. Now, they were quick to change interests on deposits and less on loans," Isarescu said during a seminar organized by Romanian business weekly ‘Saptamana Financiara’.

The central bank official said this is also an effect of fewer cheap and easily accessible resources from the outside.

"There is no longer that generosity, aggressive at times, to invest in Romania," Isarescu said.

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Moreover, the central bank official changed his forecast regarding the bank’s position as net lender for the system, saying it might even be a matter of weeks. The central banker had previously said he expected the bank’s position of net borrower to disappear in the second half of the year.

Isarescu again urged commercial banks to invest in state bonds and bills, as they would soon have to turn to the central bank’s lending facilities. He added the secondary bonds and bills market needs a revival.

Late March, the central bank increased the key rate to 9.5%. Analysts said at the time they expected interests to rise for deposits in Romanian lei and expect similar moves for domestic currency lending.

After the key rate hike, several commercial banks, including the country’s largest lenders, increased interests mainly for deposits in lei. In the case of certain savings products, interests exceed 10% per year. Only part of these banks coupled interest hikes for deposits with similar moves for loans.