Raiffeisenbank:We Are Optimistic about Economic Development

Raiffeisenbank:We Are Optimistic about Economic Development

Raiffeisenbank Bulgaria CEO Momchil Andreev said the bank's decision to lower interest rates was consonant with the optimistic scenario for the Bulgarian economy. On September 10, the bank cut the interest rates on all new loans to individuals in leva and euro by between 0.5 and 2 percentage points.

Andreev said the bank had sufficient capital and liquidity. While the risk remains high and there are some difficult months ahead, which may bring unpleasant surprises, the bank is more optimistic than pessimistic, he said.

The Bulgarian bank market is strongly competitive and tends to react rather quickly to changes in supply and demand, Andreev said. Asked about any fluctuations in deposit rates, he declined to make a forecast.

He noted three important factors in changing the interest rates in the domestic bank market. First, the withdrawal of deposits seen at the outset of the crisis when people feared that the global financial system would collapse has stopped, and some of

the money is back in the banks after they raised their deposit interest rates.

Second, credit demand has shrunk, although this is not immediately seen in bank statistics because some banks have repurchased loans sold abroad and have continued drawing on investment loans approved before the crisis hit. Although it seems that credit is growing, it is actually shrinking, Andreev said.

Third, the global economy and finances are returning to normal and risk premiums have decreased, while external liquidity has increased. In the last few weeks the bank has had quite a few requests for information about deposits from European institutional, corporate and private investors because Bulgaria is an EU member and the free movement of capital makes it more attractive than other countries of the region, Andreev said.

Source: BTA

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