Interests, racing to catch up with inflation

The year 2006 debuted with interest rates closer to the inflation rate, for the RON deposits: BRD pays up to two points more for saving accounts, while ING even doubles interests, from previous lows of 2%.

After launching an aggressive campaign in December on the retail market, also promoting savings accounts, starting January 1st, BRD offers more attractive interest rates for these products.

The new rates can reach 5.5% per annum, in the case of the Atucont product with an annual capitalisation and the minimal amount of 500 RON, and 5.75% per annum for the Atustart accounts with an annual interest rate capitalisation and the minimal sum of 300 RON. The above-mentioned interest rates are fixed until March 31st, and will subsequently be adjusted on a quarterly basis.

In the case of ING, the new interests offered for standard RON deposits amount to as much as 5% for one-year deposits, while the rate for the special Cont”Rol product stays at 6.1%, with the minimal sum for the account standing at 700 RON.

Despite offering more appealing interest rates for savings accounts, BRD still has interest rates of only 4-4.5% per annum for standard deposits.

As the National Bank forecasts 6% inflation for the end of this year, such interest rates cannot encourage people to keep their money in banks. Among the banks with a solid presence on the retail market, only BCR (Romanian Commercial Bank), CEC (Romanian Savings Bank) and Alpha Bank are offering interest rates ranging between 7 and 7.5%, for one-year RON deposits.

“Interest rates for loans and deposits will remain relatively unchanged over the next six months, and the potential growth of up to one percentage point will not induce considerable behaviour changes – savings or consumption,” says Radu Craciun, chief analyst with ABN Amro. He believes that the NBR would pressure for higher interest rates only as a last resort solution in case a disinflation reversal should be signalled.

Consequently, November 2005 signalled growth by only 0.7% in population savings from the previous month.

Boosted by the recent surge in the interest rates offered for euros and dollars, euro-denominated deposits by the population rose by 25.8% in November, while corporate foreign currency deposits went up 60.1% from the corresponding period of the previous year.