I don’t understand how banks can offer much better financial terms to hypothetical clients through the “First home” programme than to their already existing, loyal clients.
I don’t want this to be taken the wrong way, I love the “First home” programme. Everybody stands to gain from it being implemented correctly: clients get a good, affordable price, banks and real estate developers are able to attract new clients, who had not previously qualified for a home loan, the taxpayers benefit from the taxes collected, without significant risk involved; sellers of durable goods, DIY products, furniture and home appliances gain from the higher demand; public sector employees finally learn to build, not just to tear things down.
However, the immediate advantage is the pressure it will put on cutting interest rates on already granted long-term credits. If banks can afford to grant a 5% interest rate on state-guaranteed loans in euros, and ING even said it did not need state guarantees to reach this interest rate, how can they justify the 8-10% interest rates charged on already granted loans, for which they collect interest rates and instalments? I would say the state’s guarantee could not be worth more than one percentage point. Is their attitude an honest one? Obviously not!
Of course we all like margins, and a company cannot grow, be strong and healthy without a profit. However, the first rule of trade (the bank is, of course, itself a merchant) says values are more important than value, meaning that one cannot sacrifice honesty, respect, and confidence for the sake of money and profit. Clients with medium-term loans obviously have above-average economic education. They knew they were paying excessive interest rates – and now this is confirmed.
Are local bank managers not aware that respect is the most prized asset in a client-supplier relationship? And this particularly in Romania and Eastern Europe, where client interactions with civil servants and with utility monopolies are nothing short of humiliating.
This is not to say that in retail we are always successful in making clients feel respected, but we are concerned by it, and, on good days, we actually achieve it. “However, this doesn’t seem to be a concern for bankers – who are also sellers. But not even they can play with their clients in this way for a long time.
Dan Sucu is the majority shareholder of Mobexpert furniture group.