Bruynseels, BCR: Loan demand remains weak, interest rates cannot fall much further

Loan sales on the retail segment will remain weak this year because people are still reluctant to take out loans, and banks can no longer encourage the market via interest rate cuts, because they are already “very low”, says Dominic Bruynseels, CEO of BCR, the largest bank on the Romanian market. “At 6% a year (the NBR’s key interest rate on RON-denominated loans), the interest rate is very low and not much more can be done. Competition will lead to further interest rate cuts on the market, but it is no longer as tough as it used to be in the past years. There is no loan demand any more, either, people fear unemployment and income decline,” said Bruynseels at a meeting with the press. In fact, in the first quarter of 2010, the BCR’s volume of retail loans remained on a decline, which exceeded the slight rises on the corporate segment and on the segment of funding for the local authorities.
Bruynseels believes central banks no longer have many levers available to relax the monetary policy – neither the NBR, nor the European Central Bank do – the latter cut its euro interest rate to 1% per year as early as in 2008, so the economic recovery should come from companies.