Competition between the interest rates for short-term and long term deposits

• László Diósi: We estimate a better management of inflation and the drop of the Robor, over the next year

Some of the smaller players in the banking system, in terms of their assets, are trying to attract deposits from their customers, by paying higher interest on short term deposits, compared to the short term ones. The explanation of the banks on the difference between the interest rates is that each bank has its own strategy.

László Diósi, the president of OTP Bank, said that the lower interest rates for periods shorter than one year are due to the optimistic expectations concerning the management of inflation and the drop of the Robor index. Furthermore, the interest rates of the banks are tied to the savings behaviors of their customers. The president of OTP Bank said that in Eastern Europe, 98% of the population sets up short term deposits.

László Diósi said: "The specific term is the yield curve, which rises or falls. It all depends on the cost you can obtain from that money in the long term to cover your positions. OTP Bank does not need coverage for the long term, because we have a very good position on that side. Those who need money for the long term can afford to offer higher interest rates, but we have very good liquidity. Furthermore, over the next year we expect a good management of inflation and the drop of the Robor, which is why we are seeing these low interest rates on 12-month deposits.

About 98% of the population of our region places its money in deposits of up to four months. And if people have cash available for the long term, they think in terms of investments, as mutual funds represent a recommended alternative for long term placements".

For deposits which do not exceed 4,999 lei, OTP Bank pays an interest rate of 5.6% / 1 month, 3.85% for three months, whereas for one year, the interest rate goes down to 3.7%. For deposits denominated in dollars, which do not exceed the level of 4,999 dollars, the Hungarian branch pays an interest rate of 1.15% for 1-month and just 0.7% for 1-year deposits.

Also, for companies, OTP Bank pays 5% interest on deposits that do not exceed 25,000 lei, an interest rate of 5% for one month and 4.25% for a year.

• MKB Nextebank - An interest rate of 6.75% for deposits in lei, with a 3-month maturity

MKB Nextebank offers individuals who deposit at least 500 lei in 3-month deposits an interest rate of 6.75%, whereas for deposits set up for a year the interest rate is 6.5%.

The representatives of MKB Nextebank said that the interest rates are set according to the bank's strategy to attract funds in the short, medium and long term.

• Emporiki Bank -6.80%, for 1-month deposits in lei

For individuals who open an account of at least 500 lei, Emporiki Bank pays 6.80% a month for 1 month, 7.05% for three months and just 6.55% for a year. As for the reason why the interest rates are higher for short term deposits, the officials of the bank said: "Emporiki Bank, a member of the Crédit Agricole group, offers competitive interest rates for all the products in its portfolio, regardless of their maturity".

• Piraeus Bank, Marfin Bank, RIB, CR Firenze bring high interest rates for short term interest rates

The banks which offer higher interest rates for short term deposits include Piraeus Bank, Marfin Bank, Romanian International Bank (RIB) and CR Firenze.

For a deposit of at least 500 lei opened by an individual customer, Piraeus Bank offers an interest rate of 7.6% for 1-month or 3-month deposits, and 7% for 1-year deposits. For companies, for a deposit of at least 4,000 lei, Piraeus Bank offers an interest rate of 7.6% for one month, and 7% for a year.

Marfin Bank offers individuals 7% for 1-month or 3-month deposits, whereas for a year the interest rate is 6.75%. For companies, Marfin Bank pays 7% for deposits in lei for 1-month and 6.75% for those opened for one year.

For deposits between 300 and 15,000 Euros opened by individuals RIB pays 3% for 1-month or 3-month deposits, and 2.75% for a year. For deposits between 1,000 and 15,000 Euros opened by companies, RIB pays an interest rate of 3% a month and 2.75% for a year.

For deposits of at least 500 dollars, CR Firenze pays individuals an interest of 1.75% a year for 1-month deposits and just 1% for 1-year deposits. Companies that open an account of at least 500 dollars with CR Firenze earn 1.75% a year on 1-month deposits and just 1% on 1-year deposits.