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Will banks resume lending or will they settle for 2.5% interest from National Bank of Romania?

"The lending freeze is causing the market to choke on the large supply of RON and bankers are feeling pressured to finally do something to find clients to take out loans. As they have no other options to invest their money, banks "buried" almost 36 billion RON (8.75 billion euros) with the NBR, through the deposit facility that should only be used as a last resort for cash left uninvested at the end of a day of operations.

They resorted to this solution even though the interest rate offered by the central bank stood at merely 3% a year last month, except for the last two days when it fell to 2.

The Finance Ministry's need for cash, raising some 4 billion RON per month, is no longer enough to cover the cash volume of banks, partly fed by the sales of foreign currency of the foreigners interested in exposure to RON. The overnight ROBOR interest fell below 3% yesterday.

Therefore, heavy pressure for banks to resume lending has been building up.

"Resuming lending has become a necessity for bankers, because unless one generates new business, one is no longer able to cover costs and develop. Lending becomes an essential factor because it has to generate revenues that include the cost of the risk," comments Rasvan Radu, chief executive of UniCredit Tiriac Bank."