“It’s no wonder interests got to this level given the overabundance of cash. We are also seeing it happen with government paper,’ says Matei Paun, managing partner of BAC Investment.
“It’s a trend that will continue, but I don’t think there is a risk of negative deposit interests. As long as we have this tsunami of cash in Europe we are affected, too.”
UniCredit, BCR, CEC Bank, ING Bank and BRD are offering 0.1% to 0.8% per annum for one-month deposits, while Banca Transilvania, Volksbank, Bancpost and Alpha Bank kept the over 1% interests per annum even for one-month deposits. Alpha is the only top ten bank paying more than 2% per annum for one-month deposits.
On the other hand, UniCredit is no longer paying 1% even for one-year deposits. The bank is offering 0.1% to 0.75% a year for one-month to one-year deposits.
Banks have pushed deposit interests so low because the inflation rate is close to zero. This means longer term deposits are still positive.
Banks have also cut leu loan deposits to all-time lows because of the monetary policy easing process conducted by the central bank in the past two years (the key rate is now down to 1.75% per annum). Mortgage loan interests now stand at 4% to 5% a year, even lower than those of euro-denominated loans, while consumer loans come with about 10% interest a year.
“The interests are down to all-time lows now. Mortgage lending is not increasing as much as banks would like. There is a clear appetite for lending, even though not in the entire banking system,” says Gabriel Cretu, managing partner of consultant Adwisers, which also operates as a loan broker.
(English version by Loredana Fratila-Cristescu)