Local lenders increase interest for deposits

Libra Bank, part of investment fund New Century Holdings (NCH), yesterday increased the interest for lei-denominated deposits for the second time in the past seven days. The bank launched a promotion deposit called Solutii Magice (Magic Solutions) allowing clients to secure interest up to 9.1 per year for time deposits with maturity in one month, three months, six months or one year.

The second largest lender in Romania, BRD, part of the French group Societe Generale, also plans to increase interest on deposits. However, this will also bring “a slight rise in interest rates for loans, probably more for foreign currency lending,” BRD’s Deputy General Manager, Petre Bunescu, told Business Standard.

National Bank (BNR) officials say such measures were predictable, as multinational lenders that control local banks can no longer afford to finance their subsidiaries at previous levels.

The lenders’ move comes amid a slower growth ratio of bank deposits. According to BNR data, in spite of an increase in interest on deposits, the average annual increase for lei-denominated time deposits with maturity less than two years dropped to 9.9 percent at present, from 12.3 percent last fall.