The cash deficit in the banking system doubled in February, when the banks borrowed RON 3.3 bn from the National Bank of Romania (BNR) every day, a lot more than the RON 1.5 bn they had borrowed in January, according to calculations done by ING Bank specialists, Mediafax reports. ‘Our explanation for the coexistence of a considerable deficit of liquidity and of interest rates below the key-interest is that the system may, to a certain extent, be divided into two groups. A smaller one that registers a cash deficit and a bigger one, with a bigger influence on the market, that has excessive liquidity’, according to a report the bank issued yesterday. At the same time, February figures show BNR deposits as daily averages dropped to RON 1.1 bn from RON 2.1 bn the previous month. ING analysts think this might be due to the fact that the second group has grown its state securities holdings or perhaps the liquidity moved better in between the two groups, ‘maybe through centralised instruments which avoid the issue of exposure limits’. If, in February, the group of more liquid banks in the system increased its holding of state bonds, the RON 1 bn growth indicated by the decrease of deposits with BNR suggests the subsector bought a small part of the difference of RON 5.5 bn of the value of the securities issued and of the ones maturing in February. The subsector with a liquidity deficit was therefore more aggressive in the purchasing of state securities. Also according to ING Bank’s calculations, in January, the daily liquidity deficit was lower – RON 1.5 bn – and in December the banks borrowed RON 4.1 bn from BNR every day. The biggest liquidity deficit ever since 2009, when we had episodes of severe tension on the monetary market, was reported in December. The December situation repeated in February because short-term rates registered an important decrease. On Thursday, the banks were using interest rates of 1.57 – 2.07 per cent for overnight placements, very close to the interest rate for BNR’s deposit facility of 1.5 per cent. About the situation in December, the bank analysts said the funds raised had been mainly used to finance the Ministry of Finance, explaining by that the rise in the amount of money banks borrowed from the central bank, while many other securities holders faced an increase of liquidity because they had not refinance maturing bonds. Dealers continue to suspect that, in the repo auctions held by BNR in February and January the funds were raised by some of the local banks that, in turn, financed the Ministry of Finance with decreasing yields.