The ROBOR indicator with a maturity of 3 months and 6 months, respectively, decreased on Wednesday after the governor of the BNR drew the public’s attention to the fact that some banks “they jumped the horse“. The 3-month yield fell from 8.14 to 8.06 on Wednesday, and the 6-month yield fell from 8.27 to 8.21.

ROBOR is close to the monetary policy interest rate. It has been disconnected for more than 4-5 months. Banks jumped the horse and raised ROBOR above the key rate. They overreacted. The tendency for banks and traders to be pessimistic about the future was evident, Iserescu said on Tuesday. They send banks to be more attentive to the signals of the National Bank, he added.

What is ROBOR and how is it defined?

ROBOR — Romanian Interbank Offered Rate — is the interbank money market reference rate for placed deposits, named as such since November 2007. Before that date, it was called BUBOR (Bucharest Interbank Offered Rate). Placed deposits represent banks’ liquidity supply in the interbank money market, where banks lend money to each other, explains Bohdan Chaprara.

While ROBOR is increasingly talked about, ROBID (Romanian Interbank Bid Rate), another index of the interbank money market, which is the base rate of the interbank money market for deposits raised by transaction participants, is less discussed. ROBID and ROBOR are calculated by Reuters as the arithmetic average of interest rates applied by 10 credit institutions relevant to the Romanian market in terms of interbank money market activity.

These 10 commercial banks are selected according to predefined performance criteria, the list is updated every 6 months. The rules for setting the ROBID and ROBOR reference rates are established by the National Bank of Romania. It also publishes reference rates, which are relayed by Reuters, every weekday at 11:00 a.m.

These rules define the principles, method of setting and publication of reference rates, rights and obligations of the parties involved in setting ROBID and ROBOR reference rates.

The activity performed to set the ROBID and ROBOR base rates is called “fixing”. In this process, two reference rates are quoted for maturities of one day (Y/N), Y/N (1 day starting from the business day following the fixing date), one week (1 week), one month (1 month), 3 months (3M), 6 months (6M), 9 months (9M) and 12 months (12M) respectively. Thus, reference rates are set for different periods depending on the time horizon for which banks lend to each other. According to the regulation, the ROBID/ROBOR rate for each maturity is calculated by Reuters as the arithmetic average of the last rates indicated by each fixing participant (bank) for deposits withdrawn in the 15-minute interval before fixing, after eliminating extreme values. The rate specified by a participant for fixing is the rate at which deposits in RON are accepted from another participant within 15 minutes after the Reuters publication of the ROBID and ROBOR rates.

ROBOR is more popular than ROBID because it is part of the formula for calculating variable interest rates for bank loans, both for individuals and for legal entities. This method of setting variable interest rates came into force in 2010, after publication in the Official Gazette GEO 50/2010. Among the ROBOR rates set in the interbank money market, the most popular are the 3-month and 6-month rates, which, in fact, are part of floating interest rates. ROBOR became more and more popular as the share of loans granted in lei increased.

ROBID and ROBOR are not Romanian inventions! Along with this, we also meet other international and national standards. We are interested in EURIBOR and LIBOR, both of which are also used to calculate variable interest rates for loans in foreign currency according to GEO 50/2010. EURIBOR (Euro Interbank Offered Rate) is a money market reference rate for the euro currency at which one leading bank offers another leading bank interbank term deposits within the Eurozone. The rate is published daily at 11:00 (CET) Brussels time. LIBOR (London InterBank Offered Rate) is a reference rate that indicates the average rate at which participating banks can obtain unsecured funding in the London interbank market over a specified period of time in a specified currency. . The rate is calculated and published daily after 11:55 (GMT, London time) and is available through the Thomson Reuters or Bloomberg systems. This index is calculated as the arithmetic average of interest rates charged by major banks for 5 currencies (pound sterling, euro, US dollar, Swiss franc, Japanese yen) that have 7 different maturities (overnight, one month, three months, etc.). .)