Reducing interest rates on deposits and loans requires the Troika

For every point of decreasing interest rates on deposits, there will be a corresponding half-point reduction in loans, "which will not pass automatically when preceded by the decrease in deposits," a head of retail in a large private bank told newmoney.gr.

He adds that after capital increases there will be a rapid defuse, which is troika’s pursuit for the period after the recapitalization of banks. Overall, the reduction in interest rates on deposits may be as high as 200 basis points.

Alongside the shrinkage on deposit rates, a key objective is to reduce interest rates on loans. The goal is for the banks to achieve profitability, coupled with the fact that non-performing loans amount to 1/3 of the loans, will not allow for a corresponding reduction of interest rates on loans.

The goal is to reduce lending rates to ensure that businesses can acquire cheaper capital and restart the economy. Reducing interest rates is vital for businesses and banks as well, so they can get paid more easily from the loans they disburse.