The leaders of the banking retail market have introduced new interest rate cuts for ROL deposits after having waited to see the new levels of the monetary market so as not to scare away customers.
Banca Comerciala Romana (Romanian Commercial Bank), which accounts for 26.1% of the market, yesterday cut its rate for ROL deposits by one percent. The bank now pays 12-14% on savings, depending on the term of the deposit.
For its part, Banca Tiriac, another important player on the retail market, reduced rates for ROL deposits by 1.5 - 3% early this week. They now offer between 11% and 12.5% a year.
In fact the bank is offering the same rate for one year as for one month: 11%. This hints at the bank's expectations that rates will drop below this level.
BRD-Groupe Societe Generale, the second bank in the system, recently made a similar move by cutting interest rates both for individual and corporate customers. The bank currently pays 12.5% to 13.25% a year on deposits in ROL.
Raiffeisen Bank followed suit and its rates range between 12% and 12.5% a year.
Banc Post, the eighth leading bank on the market, is also planning on reducing its rates by approximately one percentage point. The change is to be implemented in the coming weeks. The bank currently offers 13.5-15%. Banks less focused on retail cut their interest rates for individual customers to an even greater extent, being the first to start cutting by several percentage points. ABN Amro pays 6-8% a year for deposits in ROL, while HVB Bank, the first to break the 10% threshold, offers between 8% and 8.25% per year.
Banks have avoided publicising the cuts, since after all they represent bad news for depositors, who get less reward for their savings and who now also know they will soon be paying higher tax on the interest they earn - 10% as of April 1.
On the other hand, the interest rate decline was unavoidable given the central bank's average rate of only 9.97% during the latest auction to purge excess liquidity on the market. The NBR wants to narrow the gap between interest rates for ROL and those on international markets to the least attractive level possible for speculative capital with a view to the upcoming capital account deregulation.
Banks have preferred to avoid cutting rates before the new level is confirmed in order to avoid reliving the experience of the beginning of last year, when the NBR called for an increase in interest rates due to lending that was moving too fast.
Rates on the monetary market have fallen visibly to 16-17% since the beginning of the year when the NBR decided to limit purging operations. As a result, overnight rates have fluctuated between 5% and 10% per year in recent weeks. Dealers say interest rates will not drop below 5% because this what the NBR pays for the deposit facility. liviu.chiru@zf.ro
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