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Romanian banks hold European record in variable interest rate

The margin the Romanian banks use to calculate variable interest rate to mortgage loans is the highest in the central and southeastern European region, according to Cotidianul daily on Monday, reading such data collected from the most important banking groups in the region.

The data show the lending institutions in Romania practise such margin standing at approx. three times the margin in the Czech Republic, Slovakia and Austria for instance. According to the newspaper, a mortgage loan in Austria now comes with the payment of a fixed interest of 6.25 percent of the value per year, in the first three years of lending. The value - released by the Erste group, which is one of the most important such banking operators in the region - is very close to the one in Romania, but with the interest staying fixed for three years and not for maximum two years as in Romania. Moreover, there exist such banks on the Romanian market, as Millennium, who offer fixed interest rates for no more than three months. Once the lower 'promotional' interest interval expires, the Austrians pay an interest calculated based on the formula 'EURIBOR plus 1.5 percent' compared with 'EURIBOR plus 3.5 percent' in the case of the Romanians. In fact, says the newspaper, there are such local credit institutions which add such a margin of up to 5.8 percent to the EURIBOR, which is the European average interest. In terms of the margin practised in Romania by the banks in the case of the credits in lei (ROBOR), the Bucharest daily explained it does not drop below 6 percent, that is ten times higher than in Czechia. Local bankers say the differences are the result of both the 'specific' economical situation in Romania and the BNR (central bank) regulations. 'One of the obvious reasons of such differences is represented by the regulation cost imposed by the BNR, which is much higher in Romania,' Mihai Bogza, chairman with the Bancpost Board of Directors said. 'Only the minimal compulsory reserve makes us add 2.5 percent to the margin, and if we add 2.5 percent to the values abroad, we will have as result approx. the same values,' the Bancpost official said. He added that, in order to appreciate the situation correctly, one should take into account also the fact that 'the banking system in Romania is still quite small in size compared with the other countries.' Financial consultant Bogdan Baltazar came with the same argument, saying the BNR regulations result in an increase in the interest rate by 3 percent. 'In the context the inflation stands now at 8.6 percent, the interests of the banks cannot drop below 15-16 percent,' Baltazar also said referring to the loans in lei. Sursa: http://www.rompress.ro

Tags: romania percent margin interest banks european romanian bnr

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