“We are not encouraging in any way cutting the deposit rates again as a result of our action. We actually believe they are too low. Banks need to realize they went through a relatively painful process. When they could not keep the lines of credit from their parent banks, the foreign-held banks had to adjust. I don’t think that was too nice a moment for them,” Isarescu said at the media briefing after the monetary policy meeting on Monday.
The loan-to-deposit ratio fell from 130%-140% towards 100%, so it would be a pity for this effort banks made to consolidate their lending base to be ruined by a narrow short-term vision, Isarescu added.
Most banks have positioned their deposit interests at 2% to 3% per annum, below the key rate. The rate cut from 3.5% could be a reason for them to push deposit rates to meager levels of 1% to 2% a year like never before in Romania.
Banks still have some room to cut loan interests and should get close to their customers, consolidate their loan base and work with customers on finding viable projects, Isarescu added.
“It’s in their best interest in the medium and long run to stimulate lending.”
The central bank governor said that Romania lacking projects as banks have said seems more like an excuse than anything else.
“We request banks to get close to their customers, consolidate the lending base and work with customers on finding viable projects. It’s their duty to create businesses with their customers.”
(English version by Loredana Fratila-Cristescu)