Fall of Romania's currency hikes loan interest rates on rising lenders' costs

The weakening of Romania's currency, the leu, raises risks and costs for lenders which have to increase loan interest rates in order to limit risks, including the currency ones, GM of ING Bank Romania, Misu Negritoiu said.

The effect of the leu's slump adds to the 2 percent increase of the monetary policy interest rate of the central bank (from 7 percent per year in October to 9 percent in February). This hiked the interbank interest rates which are referential for the variable interest rate loans.

"We fight more than the central bank to limit loans in foreign currency because most of the times the currency risk gets unnoticed," Negritoiu said.

The structure of ING Bank Romania's loan portfolio is split into 50 percent loans in lei and 50 percent in euros. On the wholesale segment loans in lei stand at 55 percent, Negritoiu explained. Nevertheless, the retail segment has the most loans in foreign currency (60 percent).

The loans in foreign currency given to individuals stood at 55 percent of total loans on the Romanian market at the end of January.

ING Bank Romania is part of the biggest Dutch bank ING Groep NV. The group also includes ING Asigurari de Viata si Pensii Private, ING Lease, ING Commercial Finance, ING Real Estate Investment Management and ING Real Estate Development.

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