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National Bank economically encourages banks to lower rates on rubel deposits

Banks in Belarus have lowered their rates on individuals’ rubel deposits to levels no higher than 45 percent per annum, while rates on rubel deposits for legal entities have fallen to 35 percent.

Banks began to reduce their rates after the National Bank of Belarus (NBB) promised financial support, a banking source close to the matter told BelaPAN on Monday.

“NBB representatives earlier suggested lowering interest rates in deposits, but banks were reluctant to do so because they relied on deposits as the almost only source of funding, but at a meeting held at the NBB in late November, the central bank provided guarantees of financial support, which made possible for banks to reduce their rates on deposits,” the source said.

On November 27, the NBB reduced its rates on liquidity support loans to 35 percent per annum.

The source noted that one of the National Bank’s conditions was that banks’ lending growth should not exceed one percent a month.

“The NBB constantly reminds banks that if a bank strongly deviates from the required trend, this bank will not be treated favorably by the regulator,” the source said.

Individuals’ rubel time deposits reportedly rose by 2.3 percent, or 534.3 billion rubels, in November to 23.3 trillion rubels following a decline in October.

“Although data for November is certainly better than data for October, the November rise was actually due to accrued interest,” a senior banker told BelaPAN.

However, despite high devaluation expectations, people continue to keep their savings in rubel deposits because the interest rates are still high, the banker said.

As of December 1, individuals’ bank deposits, including time and demand deposits, totaled more than 100 trillion rubels, with foreign currency deposits making up two-thirds of the amount.