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Bulgarian banks reduce corporate loan interest rates

Thu, Sep 17 2009 09:13 CET

byDnevnik.bg

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Bulgarian banks reduce corporate loan interest rates

Photo: Julia Lazarova

After reducing interest rates on household mortgages in the week ending September 11 2009, the Bulgarian banking sector showed the first signs that businesses might get some relief, too.

On September 16, Raiffeisenbank announced that it would reduce interest rates on its new loans to small and medium-sized enterprises, setting the stage for other lenders to follow suit.

Last week, four lenders including Postbank, Raiffeisenbank, CIBank and UniCredit Bulbank rolled out promotional terms, softer rates and other special offers on their mortgages targeting individuals.

Analysts said that the shift in strategy was prompted by a fierce deposit war that sapped banks’ resources and excess liquidity amassed by lenders that hoarded cash.

Following a neck-breaking increase in the fallout of the credit crunch which sucked out liquidity from the hovered around their current levels, edging even lower in June and July.

Loan interest rates are expected to shed about one percentage point by the end of 2009 before lending volumes could start to gain some weight.

Raiffeisenbank cut by 1.2 points the rates on its secured loans to SMEs to 10.8 per cent for local-currency loans and by one per cent to 9.2 per cent for euro-denominated loans. This compares with a market average of 10.44 per cent and 9.26 per cent, respectively, for July and 10.32 per cent and 9.10 per cent, respectively, for July 2008.

Source: Dnevnik.bg
 

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