“After decreasing interest rates for deposits, we will start pushing down the loan rates accordingly”, said Mihai Bogza (photo).

He added that the market liquidity improved significantly, hence interest rates for deposits should decline.

“Deposits in lei should offer a return no higher than 1-2% above inflation projection. The normal level of interest rates for deposits should stay in the range of 6-8% in this period”, Bancpost’s CEO continued.

With a flagging banking market, lenders have shifted focus on preserving the quality of existing loan book. And in the event of a damaged profitability, credit institution should start considering cutting costs.

“Bancpost is running an rent renegotiation process for the premises under lease, aimed at reducing operating expenses and optimizing staff costs”, said Mihai Bogza. He added that another major objective was to preserve the liquidity level, as it has improved significantly over the past few months from end-2008.

“Even though since last fall we had a good loan-to-deposit ratio, we remain focused on drawing deposits, considering the importance of setting up the required reserve ratio”.

In a sluggish market demand and tight loan conditions, the bank considers diverting its liquidities to state securities and making a living participation in financial activities of public projects. Bancpost’s state security portfolio stands at 500 million euros.

“There is a budget gap that needs to be filled. I think banks in Romania, who trust the public sector, have the ability to fill this gap under better circumstances than in foreign markets. Furthermore, we aim at financing major public projects and we are willing to compete head to head with other potential financiers, which I think will lead to an improvement in cost management regarding sovereign debt”, the CEO added.