Greek banks begin interest battle over clients’ money again

Greek-held local banks are back in the game with “attractive” interests on deposits in both RON and euros in an attempt to raise as much cash from local clients as possible, given that the increasingly more complicated financial problems of Greece are making funding for Greek financial groups harder and more expensive to find.

Greece’s problems have again shaken trust on the interbank market, and local dealers have been instructed by their parent banks’ central offices abroad to reduce exposure to Romanian subsidiaries of the Greeks. Which has complicated matters, forcing banks to be more focused on clients.

While most banks have cut interest rates on deposits to 7% a year for RON and 3% for euros, Greeks are now offering 8% a year or even more for RON, and 4% for euros. The move goes against the overall interest rate decline trend, induced by NBR’s decision to relax the monetary policy rate and the improvement of the risk perception among foreign investors, which has made loans in foreign currency cheaper.

Greek-held banks’ loans exceed deposits, which is especially true for foreign currency loans. Whereas throughout the years of lending boom shareholders pressured local subsidiaries to boost market share, keeping them supplied with cheap foreign currency funding, now things have radically changed. Therefore local banks have to find alternative sources to refinance the loan portfolios granted in the past.

Nicolae Cinteza, head of NBR’s Supervisory Department, says he has noticed this interest raise move over the last few days, which includes the interbank market, but stresses that the Greek-held banks have no capitalisation problems.