Whereas the interbank offered rate ROBOR was correlated with medium-term lending, just like a single fruit jam, the new Consumer Credit Reference Index (IRCC) is a sort of marmalade of an unknown fruit mix, an index calculated based on overnight transactions which has no connection with the market, executive president of the Romanian Banking Association (ARB) Florin Danescu declared on Wednesday at the Financial Market Forum, according to Agerpres.
"Explaining the ROBOR and the IRCC is very difficult. The IRCC is an average of several ROBOR rates, an average of several interbank rates at several terms. The ROBOR was related to medium-term lending, whereas today we have an index calculated on the basis of overnight transactions, which is somehow sent six months behind its enforcement term. In conclusion, forgive me for using a metaphor: whereas we were using a single fruit jam - the three-month ROBOR, today we correlate lending with a sort of marmalade made of unknown fruit, all we see is the final result that stands in no connection with the market," Danescu told the forum.
He pointed out that the recent debates launched by the authorities on the subject of bank interest rates have triggered a lot of unrealistic expectations for Romanians with loans, who are now hoping that they will pay lower rates.
"Expectations are being created that can be more or less fulfilled. After all, the promise has been made and, speaking of dialogue, it's been a surprise for us too, that interest rates in Romania will decrease. From the political point of view, you can make such a statement, because judging things like an accountant, you have income and expenses; dear voter, I cannot increase your income, but I can cut your expenses. The promise was made that interest spending will drop. (...) Expectations have been created, there was a pressure build-up and then came the acknowledgement that the matter had not been properly discussed, but expectations lingered on," said the banks' representative.
According to Danescu, bank law experts consider that the new reference index for interest calculation does not apply to First Home loans, because the reference in the special law for this program is the ROBOR.
"And yet, there is talk today of applying the index for the First Home program, and again there is a public expectation that interest rates will fall, which leads to a massive unpredictability on an earlier subject: remember the price capping law? It was rejected for unconstitutionality and what we have now is another form of promising lower industry prices for the citizens," Danescu said.
In early May, the National Bank of Romania published the new Consumer Credit Reference Index (IRCC), regulated by OUG No. 19/2019, which is 2.36 pct per annum and is calculated as the arithmetic mean of the daily interest rates on interbank transactions in Q4 2018.