Lower interest rates were expected on the market, considering that banks could not afford to pay high rates on deposits long-term, considering that revenues from lending have stagnated.
The liquidity shortage, which became acute in the final quarter of 2008, forced lenders to offer interest rates in excess of 20 percent on lei deposits. On the one hand, banks which entered the interest race need to balance their loan-deposit ratio, and on the other hand, they require resources to continue lending.
“We are expecting a drop in interest rates on deposits which would lead to a decline in interest rates on loans, and to a rebound of margins. At present, we are working with very low margins on foreign currency, about one percent. When there will be more resources on the market, due to the release of reserves, and banks are determined to maintain their exposure in Romania, we can infer that interest rates will slide,” said Rasvan Radu, Chief Executive Officer of UniCredit Tiriac Bank.
Banca Transilvania, one of the top 10 largest players in the system in terms of assets, cut interests on deposits most aggressively. Thus, lei deposits made by individuals currently benefit from annual interest of 13-13.5 percent, while euro-denominated deposits have annual interest of 5.3-6 percent.
Alpha Bank cut 0.25 percentage points off its interest on the euro time deposits, while GarantiBank cut up to 0.75 percentage points off lei interest rates, and RIB lowered interests by up to one percentage point.
