The real economy is therefore choked because the cash is stuck in banks instead of flowing into development of new production facilities or into creation of new jobs and banks complain they have nowhere to invest the money they got from their customers.
“Although deposit interests are low, companies’ appetite for investments is low, too. Investment appetite depends on market prospects and companies are reluctant to invest now,” says financial analyst Aurelian Dochia.
The deposits banks got, EUR50 billion equivalent, exceeded loans in mid this year for the first time since 2007.
Deposit interests are higher for retail customers, almost 3% per annum. Therefore retail customers get 1.3% higher interests than companies for their deposits. The gap has widened since the end of last year when it stood at less than 1%.
Banks are actually penalizing the volatility of the resources attracted from companies and try to make sure individual depositors do not take their money out and leave, since they can hardly rely on the lines of credit from their parent banks.
“The general rule is that consumers make deposits and companies take loans. It so happened over the last few years that companies would have cash and keep it in the bank. Corporate deposits are more volatile, however, as companies keep their money in deposits only temporarily, until they find opportunities to invest it and if they don’t, they distribute it as profit,” Aurelian Dochia explains.
Although higher, deposit interests for retail customers have gone down, too, lately so consumers are choosing longer and longer maturities for their deposits.
Consumers get 2.6% per annum for one-month deposits, while one-year deposits come with as high as 4% interest.
Companies, on the other hand, barely get 2% for one year and less than 1.5% per annum for one-month deposits.
Individual customers had RON81 billion in deposits in local currency at the end of August, 5% more than in the corresponding period of 2013, while loans stood at RON38 billion, which means deposits were double the loans. Deposit growth rate has slowed down, though, from the 9% at the beginning of the year.
On the other hand, corporate loans are almost equal the deposits companies keep in banks. They had RON58 billion in deposits at the end of August, while loans amounted to RON53 billion. Since most of their loans are foreign-currency denominated, their overall loans are actually higher than their deposits.
(English version by Loredana Fratila-Cristescu)