Savings accounts overshoot time deposits

The population’s RON-denominated savings with banks were almost exclusively channelled toward savings accounts in the first four months of this year, while time deposits stalled, according to NBR data.
Savings accounts, flexible savings products, combining the accessibility of a current account with high interests, have thus come to almost drive the classical time deposits out of the market.
In late April, the population’s RON in sight accounts (a category including both current and savings accounts) amounted to 21.5bn RON. As a result, their amount almost equalled that of deposits, which have stagnated since the beginning of the year at 24.7bn RON (the equivalent of 6.7bn euros).
In fact, from April 2007 through April 2008, time deposits climbed by a mere 3 billion RON, namely 14%. During this period, sight accounts leapt by 10bn RON, a two-fold increase.
A penchant for savings accounts is also apparent in the case of foreign currency placements, although time deposits still hold a dominant position.
Over the 12 months ended in April, the amount of foreign currency sight deposits rose by 108% (in RON), to the equivalent of 12.46bn RON (3.4bn euros). Time deposits increased more, to 18bn RON (4.9bn euros), but they have advanced by only 40% over the past year.
Just like in the case of RON savings, foreign currency-denominated time deposits “froze” at the level they registered at the beginning of the year.
Most players in the system now have both RON and foreign currency savings accounts in their offers.
Although the products function in a similar way, banks differentiate themselves though various elements. Some players have chosen to attach cards to these savings accounts to ease up customers’ access to funds.
Other players have preferred not to attach cards, in an attempt to discourage withdrawals. In fact, most banks require a minimum sum to be kept in the account so attractive interests can be offered, and should the amount drop below this level, a current account interest rate is applied.
Also, there are differences in the way interest rates are calculated; while some players take into account daily fluctuations, others take only two days as reference.
Amid the falling liquidity on the monetary market, banks have become ever more interested in attracting resources from customers. Several players, such as Alpha Bank or Bancpost, have recently launched savings accounts, which they have promoted aggressively to raise funds from customers.
However, most players have focused on classical time deposits and launched promotions with attractive interest rates.
The best interest rates for RON time deposits now stands at 11% per annum.