Seven Banks Cut RON Deposit Rates In A Month

• The others either offer low enough rates or are still chasing liquidities

Ana Săbiescu

Banks are approaching the end of the race for attracting liquidities from individuals, while fixed-term deposits are about to fall out of fashion once again.

Over the last month, Banca Transilvania, Alpha Bank, OTP Bank, Garanti Bank, Romanian International Bank, RBS Romania and ING Bank have cut the interest rate offered for RON-denominated deposits made by individuals by approximately one percentage points.

The other commercial banks, which have not reduced the interest rate paid on deposits, can be grouped into two large categories: those who offer lower rates and do not need further cuts, and those who still maintain high interest rates. BRD - Groupe Societe Generale, Raiffeisen Bank, BancPost and UniCredit Tiriac Bank did not join the interest rate race, proving they did not have any financing issue.

Even National Bank Governor Mugur Isarescu recently warned banks that "the battle for customers should stop." (...) "Commercial banks are practically inviting customers to charity. There is a battle for deposits going on right now and this race for interest rates will become non-sense. Saving cannot grow in Romania and cannot be increased by luring customers with high interest rates. Romanians would have to change their habit of consuming in order to be able to save," Governor Isarescu said.

OTP Bank made the highest cut on fixed-term RON-denominated deposits in the last month. The bank took 1.5 percentage points off their rate to 9.5% - 12.5% p.a. depending on maturity. RBS Romania and Romanian International Bank cut the bid interest rates by 1.25 percentage points, while Garanti Bank and Alpha Bank cut 0.5 percentage points.

Interest rates offered on savings products for individuals embarked on an upward trend at the beginning of the year with many banks intensifying promotional offers for deposits. However, as banks became more comfortable with their liquidity level, the trend reversed. Analysts believe that the downward trend will continue as cutting the bid rate for deposits is the only way to cut the offered rate for loans.

Radu Ghetea: Deposit rates are on a downward trend

The interest rate offered by commercial banks in Romania for deposits made by individuals, especially lei deposits, are on a downward trend, said Radu Gratian Ghetea, President of the Romanian Banking Association.

"Saving is not currently discouraged. On the contrary, the interest rates are too high, in my opinion. The interest rates for deposits are decreasing, especially for lei deposits. This trend will enable us to also decrease the interest rates for loans," Ghetea told Agerpres.

He explained that each bank would review their rates for both deposits and loans, as well as in relation to other banks. "Steps have been taken to counter the lack of confidence in the banks and the feeling that rates are too high," he said.