Rekkers, BT: Cut the cash reserve ratio on lei to 2%!

“I cannot understand why the cash reserve ratio is so high. I would like the cash reserve ratio on lei-denominated liabilities to be close to the level in the eurozone, of two percent. Also, I believe there is potential for cutting rates on loans,” Rekkers said during a seminar on lending. The banker added that 65 percent of the loans granted by Banca Transilvania are in lei.

The official’s statement comes after the Chief Economist of the National Bank of Romania (BNR), Valentin Lazea, spoke about a preference of banks and clients for foreign currency loans. “Banks focus on granting lei-denominated loans for the government sector (...), because banks can invest in national currency state bonds at no risk they no longer need to take risks with private clients,” Lazea added.

The Chief Economist of BNR said that the margin for new lei-denominated retail loans, expressed as the difference between rates on loans and those on deposits, rose to 7.3 percent in August 2009, from 2.4 percent in December 2008. Meanwhile, the margin between new euro loans and deposits for households increased to 4.1 percent in August 2009, from 1.7 percent in December 2008. Lazea said that, through these very wide margins, banks are trying “to cover losses for loans granted in the past.”

“Banks must take responsibility for their mistakes, even if this means a drop in profit, and not now fine their clients. A 7.3 percent margin cannot be justified under any condition,” Lazea indicated.

“Without question there is room for reducing interest rates, but if we refer to lei-denominated loans, I believe that the main impediment here is the low level of solvent demand. There are lending resources on the market at the moment. We cannot talk about a shortage of liquidity on the national currency side. And rates on euro loans are lower, because inflation in the eurozone is low,” said Ionuţ Dumitru, Chief Economist of Raiffeisen Bank Romania.