Small banks hesitate to cut interests on deposits, hindering lending rebound

Despite the successive interest rate cuts operated by commercial banks over the last few months, earnings offered by savings products are still high, hindering the relaxation of lending terms and implicitly the rebound of the economy. This state of affairs comes amid a reduction in small steps of interest rates offered to depositors, with the banks being reluctant to adopt aggressive measures for fear of losing clients to competitors. For clients with savings, the real earnings fetched by these interest rates are quite significant, given that inflation fell below 6% in May, whilst interest rates offered by many banks still exceed 12% a year. The most attractive offers come from small and medium-sized players, after banks in the top 10 acted faster to cut gains offered by savings products. BRD, the second-largest player on the market, called to the NBR (National Bank of Romania) to seek to persuade smaller banks to lower interest rates, as well. Other bankers are asking the NBR to further cut the monetary policy interest rate, but it remains to be seen if they will not take advantage of such a move to increase margins between deposit interest rates and credit interests.