Banks Fill BNR's Accounts Instead of Seeking Clients To Lend To

05.12.2011 ZF English

Bankers prefer to place their money at the central bank BNR at an interest of just 2.25% a year on leu-denominated deposits, while not taking any chances on the real economy.

Banks placed an average of 1.3 billion lei (EUR318 million) in each working day of this year in BNR's overnight deposit facility, amid an excess of liquidity on the market that bankers are unwilling to invest in loans.

Therefore, the first four months saw cumulated deposits of RON113 billion (EUR26.7 billion) through the permanent overnight facility. April alone saw RON34.6 billion in deposits, 7.5% more than the 2010 monthly average.

"The liquidity level is satisfactory, but many banks prefer to have above-necessary liquidity, at the risk of being less profitable.

In addition, loan demand is as yet weak because many companies have postponed investment plans in order to analyse whether the investments are necessary at this time," financial analyst Aurelian Dochia said.

The volume of loans granted to companies and to consumers fell 1.3% in March against February, to RON203.9 billion (EUR49.6 billion), according to the latest data published by the central bank. (EUR1=RON4.0842)