Romania’s Competition Council investigates banks setting crediting reference rate

Romania’s competition watchdog, the Competition Council, recently launched an investigation into the way in which the 10 major banks in the country cumulatively calculate the crediting reference rate ROBOR.

ROBOR is the average interest rate at which the banks contributing to the calculation of this index are willing to offer loans in the form of deposits in RON to the other contributing banks. The 10 banks are: Banca Transilvania, BCR, BRD-Societe Generale, ING Bank, Raiffeisen Bank, CEC Bank, UniCredit Bank, OTP Bank România, EximBank and Intesa Sanpaolo România.

A similar investigation was launched in October 2008, during the previous financial crisis, when the National Bank of Romania (BNR) fined Raiffeisen Bank and BRD for anti-competitive practices, according to Profit.ro. Both banks contested the fines and managed to get them annulled (Raiffeisen) or drastically reduced (BRD).

The initial investigation, made public in 2019, shows that the Competition Council suspected the banks of having made a deal to artificially raise interest rates. In the end, however, inspectors determined that the international financial crisis was actually to blame for the increased interest rates.

The present investigation comes after the head of Romania’s central bank, Mugur Isărescu, criticized banks over the summer, saying that they pushed the ROBOR too high, too fast, racing past BNR’s key interest rate.

The 10 banks that collectively set the ROBOR appoint specialized personnel, with appropriate training in the field of financial markets, in order to calculate the ROBOR. The personnel in question are given independence from any other entity in the bank, including the lending branch. They also have specific codes of conduct to abide by and face draconian internal controls, according to HotNews.

The ROBOR jumped from around 4.26% in March of last year to 8.44% at present. On October 6, 2022, BNR set the key interest rate at 6.25%.