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Mugur Isarescu, NBR Governor: Banks race for deposits was a mistake

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2012-02-07 16:02

Romanian banks, especially foreign ones, have entered a battle of winning customers deposits we consider it a mistake that does not lead to any positive result, said today National Bank of Romania (NBR) Governor Mugur Isarescu, at the presentation of the report on the inflation.rnrn”The population deposits increase has both good and less effects. It’s good for the population to put money aside and repay loans, but the people consume less, which limits growth, “said Isarescu.rnrnHe added interest rates on deposits are pretty high. The intensified pace of raising domestic savings to reduce dependence on external funding is not entirely bad, but should be kept in a smart balance, otherwise it may turn against the banks.rnrn”We mean not only dented profit but it would also affect the soundness of a bank: when you have 7% for deposits in lei and 4% in euro, in a world where it is difficult to obtain 1%, you think as a supervisor where you will put that money and what is the related risk. Therefore banks race for deposits launched in recent months was a mistake, “Isarescu said.

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