The National Bank of Romania''s Board yesterday decided to cut the monetary policy interest rate by one percentage point, from 8.5% annually to 7.5% annually. However, the large commercial banks cannot stomach NBR''s measures of suddenly pulling the plug on foreign currency lending and are in no rush to cut rates on loans in RON as mentioned by the central bank.
Banca Comerciala Romana is happy with its current interest rate, BRD feels it has already cut its rates enough by dropping to a fixed 10.9% on consumer loans, while Raiffeisen would rather wait and analyse movements on the market.
All of these banks, the largest three on the market, say they have no problem with observing the ceiling of 300% for their own funds set by the NBR for the volume of foreign currency loans - meaning that halting crediting in foreign currency as of September 26, when the NBR norms come into force, is out of the question.
Even banks that are already above this limit, like HVB, say the halt is out of the question.
In the case of Raiffeisen Bank, the third leading player on the market, the NBR''s measures will result in an increase of the price for foreign currency loans by at least one percent in the near future, accounting for the increase in the provision cost, without the bank considering any cut in interest rates for RON.
"We are waiting to see what happens on the market. Assuming interest rates are the same for RON and foreign currency, I wonder whether something would change in the market''s preference for foreign currency," asks Steven van Groningen, Raiffeisen Bank chairman. He believes competition in the new circumstances will not come in the form of interest rate cuts, but in finding ways to bend restrictions.
Patrick Gelin, BRD-SocGen''s chairman, says his bank will continue to offer loans in foreign currency, though will possibly be more selective about it, considering it also has been more prudent than other banks until now. As to interest rates on RON, "These rates are already too low. The reduction could continue but everything is up to the monetary policy constraints of the NBR," Gelin says. "I have no faith in the effectiveness of some of the administrative measures. It is disappointing the NBR did not resort to more intense consultation with the commercial banks, which, after all, were willing to stop foreign currency lending for individuals voluntarily, which is indeed an anomaly," Van Groningen said.
"Such administrative measures do not usually produce the desired results. Instead they induce an increase in costs for banks and clients, as well as an increase in costs for the NBR," Dan Pascariu, HVB Bank chairman says.
Nor is Banca Comerciala Romana, the leading bank in the system, rushing to announce a cut in rates for RON loans, the bank''s communication director, Cornel Cojocaru, says. He believes the market will see a slight downward trend for rates on RON loans that will be interrupted by periods of stagnation.
"The interest rates on RON will go down, but not as fast or as much as the NBR expects," warns HVB''s Dan Pascariu. He says his bank is already above the 300% ceiling but this does not mean that HVB will stop lending in foreign currency on September 26. The bank is not considering a capital increase, either.
HVB''s foreign currency credit volume amounted to 775 million euros at the end of August, up 38% since the end of 2004. The growth pace is similar to that of the second bank in the system, BRD, which reached a volume of 1.3 million euros by the middle of the year thanks to a 39% increase. razvan.voican@zf.ro
Pentru alte știri, analize, articole și informații din business în timp real urmărește Ziarul Financiar pe WhatsApp Channels
