UniCredit Romania has recently raised interests of new euro-denominated loans by one percentage point, as a reaction to rising rates on international markets.
The bank now levies interest rates of 6.95% to 10.9% per annum for euro-denominated loans, depending on the type of financing. "We want a solid expansion rather than an aggressive one," says Adriana Tudorancea, head of Retail Product Development and Management within UniCredit Romania.
Euro loan interest rates have surged internationally as the European Central Bank in December 2005 started a monetary policy tightening cycle. Since then, the benchmark interest for euro loans has risen from 2% to 3.5% per annum at present. Moreover, BCE officials hinted further raises were necessary to curb euro zone inflationary pressures.
This month, BRD-SocGen, the second leading player in the system, made a similar move, offering the same explanation, the rise in the benchmark interest on euro. On the other hand, BCR, for instance, decided to cut the rate for real estate loans in euros by 1.2% at the end of last week.
UniCredit is getting ready to bring its retail products in line with those of HVB-Tiriac Bank given that the two banks' merger should be concluded by midyear. The bank's new product and services portfolio is now awaiting approval from the board of directors.
Starting June, Adriana Tudorancea, 36, will be running the department for the Development and Management of Retail Products and Customer Segments within UniCredit Tiriac bank.
She says the bank will focus on the sale of loans for real estate investments, followed by home equity loans in 2007. As a matter of fact, sales of mortgage loans will be also bolstered by the laxer ruling framework generated by NBR's decision to drop the advance payment of 25% of the value of financed goods.
"Personally, I see NBR's project as a relaxation. While norms used to create a very clear-cut framework before, now banks have to come up with their own measures and assess the risk they are willing to be exposed to very well," considers Tudorancea.
In other words, the market of this type of financing will see further growth, though not at an accelerated pace, but at a pace that should allow for a healthy development. However, she does not expect advance payments for loans to disappear. Consumer lending is also expected to see more moderate growth as this type of financing will increasingly be taken over by retail chains.
In her opinion, banks will be increasingly differentiated by the quality of services provided.
"It's only natural for a bank to have a quantifiable quality that customers can feel," states Tudorancea. While several years ago customers used to rather look at prices above all else, now they are more focused on the look of banking branches and on the time they spend waiting to be served.
UniCredit
Has recently decided to raise the interest rates of new euro-denominated loans by one percentage point as a reaction to rising rates internationally
Now levies interest ranging between 6.95% and 10.9% per annum depending on the type of financing
Is getting ready to bring its retail products in line with those of HVB-Tiriac Bank as the merger between the two banks is due to be concluded by midyear
Will focus on the sale of loans for real estate investments this year
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