Small loan interests are more and more often offset by management fees, which are levied on a monthly basis as a percentage of the account, thus lifting real loan costs.
Only 3 of the 15 banks that responded in a survey ZF conducted on this issue do not levy such fees on consumer loans, while two other banks do not include such products in their offer.
There are considerable differences between management fees, between 0.05% in the case of Romanian International Bank (RIB) to 0.5% for RON-denominated loans granted by HVB Tiriac. Other banks, such as Raiffeisen Bank or Finansbank charge an annual management fee of 3% and 1%. Alpha Bank charges such a fee only once, but its value may get as high as 6% of the borrowed sum.
Sometimes banks levy even two monthly fees. RIB levies, beside the monthly management fee, a risk fee of 2.75% per month. BCR also charges, for certain loans, some risk fees, of 0.2%-0.28% per month.
Therefore, the impact of these monthly fees over costs is of several percentage points for one year, which would otherwise be reflected in the nominal interest rate.
Only 5 of the 13 banks that responded and include consumer loans in their offer levy file analysis fees, while 8 charge fees for loan granting. Of these, BCR, ING Bank and Finansbank charge both fees.
At the same time, most banks levy fees for the repayment of owed sums ahead of their due date.
A similar situation is registered in the case of real estate loans: only 3 of 14 responding banks including such loans in their offer do not require management fees. In the case of mortgages, management fees range between 0.06 and 0.2% per month.
Monthly fees gained ground in 2005 and 2006, when bankers tried to shun the NBR norms by turning part of the direct costs of loans into related expenditures, which were not taken into account when setting borrowers’ indebtedness capacity.
In the autumn of 2006, the NBR tightened up regulations, by introducing the notion of loan “total cost”, depending on which borrowers’ indebtedness capacity would be decided.
However, bankers complained about to the lack of details on the way this total cost should be computed.
On the other hand, bankers transferred part of loan costs into fees so they could display lower nominal fees.
As a matter of fact, there has been talk of the need to boost revenues from fees for some years, given that interest revenues are hurt by the shrinking interest margins.
Thus, banks are trying to get revenues from liabilities, charging fees for current accounts and deposits.
Only 2 of 12 responding banks do not levy taxes for cash withdrawals. Only 2 banks charge current account opening fees.
Five of the interviewed banks charge monthly fees for the management of these accounts.
Fees meant to offset interest drop
Monthly fees gained ground in 2005 and 2006, when bankers tried to shun the NBR’s stricter norms
Bankers transferred part of direct loan costs into related expenditures
Bankers resorted to this transfer to display lower nominal interest rates, as these were frequently used as a marketing tool
There has been talk of the need to raise revenues from fees in the context where interest revenues are hurt by shrinking interest margins