By Alexander Belyavsky
Cost of Belarusian loans and deposits are perhaps the highest in Western and Eastern Europe at present, with savings generating rates of 30-50 percent. “This year is characterised by different trends on the depositary market. Early on, we observed serious fluctuations — including an outflow of deposits. However, after a range of measures had been adopted, stabilisation began on the financial market and the situation took an about turn,” stresses Sergey Dubkov, the Deputy Chairman of the National Bank’s Board.
Since the recent increase in the refinancing rate (to 30 percent) the average Rouble deposit interest rate has fluctuated between 30 and 36 percent; some financial institutions — keen to attract more deposits — are offering even higher rates — of over 50 percent. Meanwhile, banks are seeing less demand for foreign currency, with the highest rate offered for Dollar deposits being just 11 percent (and unlikely to rise). After a ban was issued on loans to citizens in Dollars and Euros, banks are unable to hold this money in the required volumes; now, it’s too costly for them to keep foreign currency deposits.
The National Bank plans to focus on the safe-keeping of citizens’ deposits, ensuring that interest rates surpass the level of inflation — a decision aiming to stabilise the foreign currency market.
For those seeking loans, rates are unpalatably high. It’s a true challenge to find a situation where all sides are content with the level of their earnings and expenditure, so the National Bank has recommended that commercial banks develop additional ways to attract deposits — with preferential rates for those locking in savings for longer.
At present, most deposits are just too short-term: 3-6 months. In turn, loans are being offered for periods of no less than a year. To bridge the gap, banks are to encourage longer-term savings. Moreover, savers will be given incentives to keep their savings with the bank once their term ends. Clearly, profitable and clear terms must be offered.