The volume of deposits in lei with maturities of more than one year climbed to RON4.8 billion at the end of February, while “long-term savings” in euros went up by a third and reached almost EUR400 million (equivalent to RON1.7 billion), according to data from central bank BNR. In December-February alone the volume of these deposits went up by more than RON1 billion.
Deposits with maturities of over one year thus exceeded the equivalent of EUR1.5 billion, i.e. 7% of the RON94 billion (EUR21 billion) of individuals’ time deposits.
The share is still low because bankers only recently came with attractive offers for customers willing to leave their money untouched in a deposit for two, three or even seven years.
Banks in the past adjusted to customers’ preference for very liquid products and promoted deposits with very short maturities or even current accounts and savings accounts, so they ended up financing five to ten-year assets with liabilities over just a few months.
The need to reduce imbalances between short-term resources and long-term loans has gradually left room on the market for increasingly more savings products with long maturities, but analysts expect bankers’ new strategy not to prove fruitful.
“I think the discussion on the financing of the loan portfolio with long-term deposits is a false discussion. Banks have to issue medium and long-term bonds and people would probably be more interested in these bonds that they can sell any time if they need liquidity, rather than having their money stuck in a deposit for two or three years. This increase in the volume of medium and long-term deposits will flatten at one point,” says Radu Craciun, investment manager of Eureko Pensii.
Several local banks have lately announced they were considering bond issues in order to diversify their financing base and to ensure longer-maturity funds, especially now that they receive less support from parent banks. Not many steps have been taken in this direction so far, while increasingly more deposits with maturities of two years or more have appeared on the market.
The most meaty offer for medium and long-term deposits is that of UniCredit Tiriac, which is looking to persuade clients to hold their savings with banks over 2, 3, 5 or 7 years with interests of 6.5% a year on leu deposits and of up to 5.5% a year on euro deposits. The bank launched the offer at the beginning of this year, with the main target being customers earning above average income.
“We have noticed back in mid 2011 that clients who usually placed their savings over long maturities tended to place their money for even longer maturities,” with just 10% of the clients having small savings,” representatives of UniCredit Tiriac said.
In turn, BCR, the largest local bank in terms of assets, introduced two-year deposits in its offer last year to attract resources in lei over longer periods. As for euro deposits, the bank pays 4% a year. This compares with interest rates of less than 5% a year paid by UniCredit and BCR for three and for six-month deposits in lei.
(English version by Daniela Stoican)