While large banks such as BRD-SocGen and Raiffeisen prefer to lend funds borrowed from parent companies, smaller banks seek to improve their market shares by creating new savings instruments, some of them with a significant impact on the whole banking system. CEC savings bank and Bancpost re-launched fix interest rates deposits, skipped by most of the banks over the last year. Both banks pay more than 7% per annum for the deposits with maturities of up to one year. The note on BancPost pays such rates for deposits above €1,400 only. Separately, Banca Transilvania and OTP (Formerly RoBank) promoted a combination of sight and term deposits, with variable interest rates paid daily.
The former pays up to 7.75% for deposits above €2,850 and 7.5% for deposits above €285. OTP Romania pays for similar product only 6% p.a., which is above the rates paid by most of other banks for term deposits. Raiffeisen also sells a similar product, but with a maximum interest of 3.5%, which makes it irrelevant. Major lender, BCR – still owned by the Romanian state, and not backed by a foreign partner yet – also offers a similar product to those who have access to their money, namely in deposit certificates that pay up to 6.75% p.a. and can be cashed at any time.
By those flexible saving instruments, smaller banks may tap into large amounts of money under relatively low risk conditions. The central bank’s decision to maintain the interest rates at 8.5% and market expectations for BNR to at least maintain such a level in the future make those instruments tractable for at least one year from now. Therefore, the banks may actually use the short term savings of households, generating even more liquidity on the money market and eventually increasing the sterilization costs. These new banking products may have a significant impact on the market, particularly if larger banks join the smaller ones in an attempt to defend their market shares.