“Foreign-funded banks are obviously losing market share and this is why they’ve started this disputable, to say the least, competition to increase the interest rates on deposits,” Isarescu told reporters.
He said the local subsidiaries of foreign banks are not entirely wrong in their attempt to break free from financial dependency, but they must maintain a “smart balance” or the entire process could turn against them.
“It makes you think when you see interest rates of 7% to 8% for leu-denominated deposits and of over 4% for deposits in euros, when everywhere else in the world you can hardly place your money for more than 1%… The consequences will become visible toward the year-end,” Isarescu said.
He mentioned the lenders’ policy to increase interest rates comes in conflict with the central bank’s move to lower its main rates.
“I’ve sent them a clear message that this battle they’ve started at the beginning of the year was a mistake,” the central bank’s chief added.
The central bank last week lowered its key rate by a quarter of a point to a record low of 5.5% a year, the third cut in four months, in a move to boost lending and stimulate economic recovery.