Interest rates hike as tensions on international markets deepen

Inevitably, BCR, BRD, Alpha Bank and Credit Europe Bank are only some of the banks that have already announced hiking the interest rates for EUR and RON denominated credits, thus continuing the trend that started last autumn.

Bucharest - Despite registering an opening session that promised another day of losses, European stock markets have continued to grow yesterday. On the other hand, the indexes of the main Asian stock markets have registered falls ranging from 4 to 8 per cent, after they had lost 4-5 per cent on Monday on the backdrop of fears regarding the recession of the American economy. All these developments have determined the banks in Romania to hike the interest rate.

Thus, starting on Monday, the Romanian Commercial Bank (BCR), the largest bank in the Romanian market asset-wise, has hiked all interest rates for retail customers for both RON and EUR denominated loans, the cost of offered loans growing by half a percentage point, according to a press communique.

The savings bonus is set to grow in February by about 0.8 per cent. The installments of EUR and RON denominated credits that are already in balance and of those that have been offered starting with January 21, are set to automatically rise. For now the floating rates are an exception to that trend, with their cost set to be hiked starting March 31. At the same time, BCR has announced that for the time being it maintains the interest rate level for EUR and RON denominated fixed rate loans that are in their first loan period.

'The Bank has to adjust its interest rate for EUR and RON denominated loans in order to insure a balanced loan and credit risk policy. In fact, hiking the interest rate falls in line with the market's general trend,' Dorin Cojocaru, executive director of the Retail Loans Office within BCR, stated.

The new floating rates for the RON denominated 'BCR Home' mortgage loans climb up to 13.5 per cent per year, while those for the EUR denominated mortgage loans climb to 9.6 per cent per year. The floating rates for RON denominated MaxiCredit consumer loans reach 12 per cent per year, while those for the EUR denominated consumer loans reach a level of 10.1 per cent per year.

The interest rate hikes could continue this week with a similar announcement from BRD-SocGen. 'We will probably modify the interest rates in the near future too. Discussions have already taken place and we could announce new interest rates this week' Sorin Popa, deputy General Director of retail within BRD, has stated for 'Ziarul Financiar.'

'We are considering several scenarios and we will act depending on how things evolve,' Popa added. The hiking of interest rates was inevitable considering the trends that had started as early as last autumn both on the internal and international markets. Alpha Bank and Credit Europe Bank were some of the banks that have announced hikes in their interest rates. At the same time, Transylvania Bank has stood apart in the last months by successively hiking the interest rates it pays for attracting EUR denominated deposits, given that the bank lacks a foreign majority shareholder that would secure its financing lines.

Erste Bank: No reasons to worry about mortgage crediting crisis effect

Romania is currently out of harms way in what concerns the direct effects of the mortgage crediting crisis in the United States, Henning Essentcker, Erste Bank representative within the Capital market research Office for Central and Eastern Europe, has stated yesterday.

'In Romania there are no reasons to worry about the mortgage credit crisis in the US,' the Erste official underlined during a presentation on the capital markets in Central and Eastern Europe. He assured that the region is still on a development trend and is not yet under the impact of the global financial crisis.

The head of Erste's CCE research has reminded that the Romanian capital market is still small and underdeveloped compared to other regional markets. He underlined that at the end of 2007 the capitalization on the Bucharest Stock Exchange (BVB) represented EUR 30.58 bln, in contrast to EUR 767.26 bln in the Czech Republic, EUR 33.22 bln in Hungary and EUR 146 bln in Austria.

Romania, EU member state with record interest rates

Foreign banks are taking advantage of the Romanian frenzy for loans. The interest rates on the Romanian market are sometimes 200 per cent higher than the ones operated in the country of origin or in other countries where the banks have branches, Tuesday's 'Gandul' edition informed.

BRD's effective annual interest rate is two times larger in Romania (16.84 per cent) than in France (8.01 per cent). The difference consists in taxes and commissions, with their value being two times higher in Romania. The figures show that in most of the cases the Romanians pay one of the highest interest rates in the European Union. Whether we talk about real-estate loans or consumer loans, be they denominated in EUR or in national currencies, all of them are cheaper in countries such as Greece, Poland, France or the Czech Republic and even in neighboring Bulgaria.

Alpha Bank Romania is an example in that sense, offering EUR denominated real-estate loans with 'promotional' interest rates that start from 5.9 per cent (fixed annual interest rate). And that happens while the mother-bank in Greece has in its portfolio similar credit products with interest rates that start from 3.5 per cent.

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