Lending will not rebound too soon, even with an aggressive interest rate cut by the NBR, because, besides the monetary policy relaxation, the trust among banks and between banks and their clients needs to be rebuilt, too, estimates Radu Craciun, investment manager of Eureko Fond de Pensii (Eureko Pension Fund).
"The question is how the relaxation of the monetary policy, which is not a purpose in itself, will propagate through the system. The basic requirement is that all banks should have unrestricted access to financing from the interbank market, but this is not the case. The lack of trust among banks persists in form of very restrictive exposure caps set by the parent banks, which prevents the proper operation of the market to rebalance liquidity."
Craciun, who has a long experience as a macroeconomic analyst, anticipates that interests on RON deposits will go down to one digit, but does not believe the same will happen to the interests on credits in domestic currency.
"The normal thing would be to see rates on RON loans below those on loans in euros and that is not out of the question in a timeframe of twelve months, considering exposures in euros of banks in Romania are already limited."
He says the reluctance of banks to grant loans is not surprising, when they see the number of bankruptcies and unemployed people go up, so that it is hard to select a safe client.
The fact that NBR Governor Mugur Isarescu insists on talking about the still too high interests banks are paying on deposits could be explained by the concern that those interests might operate as an additional factor discouraging consumer spending, Craciun believes.
He also believes that the Government will not be able to avoid raising an important tax next year because the budget will simply not manage to collect the necessary minimum revenues in the current fiscal structure.
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