Radu Gheţea, the former head of the banks' association RBA and now president of Libra Bank, in an interview given to daily Ziarul Financiar, expressed expectations for that interest rates to rise for both loans and deposits.

The rate hikes operated by the National Bank of Romania (BNR) even before the outbreak of the war in Ukraine already have effects on the interest rates, he argued.

"We have seen that the interest rates are approaching 4% for the local currency deposits; they are closely correlated with the interest rates on government securities that reached 4.50% for the 1-year tenant. I am convinced that [the interest rates of the Government bonds] will grow as well," said Gheţea.

Banks will try to prevent households from withdrawing their savings and stashing the cash (preferably foreign currency) under mattresses.

He also said that the local currency could not be sustained by the central bank at the current exchange rate for long, and it will depreciate below the benchmark of RON 5 to EUR by the end of this year.

Banks will continue extending loans, he assured, adding that each debtor will be will screened beforehand. 

(Photo: Octav Ganea/ Inquam Photos)

iulian@romania-insider.com