GE Money Bank emergency loans may lead to greater risks, Alexander Metzger says

18 November 2008 (10:09)

‘The interest rate a bank offers on a loan is an important customer demand indicator. Even though the rates GE Money Bank is offering may seem way overpriced at the moment, a number of potential borrowers who have no other way of covering their pressing payments might already find this offer somewhat realistic,’ Management Company’s Investment Director Alexander Metzger said to an UrBC reporter.

GE Money Bank is now offering customers loans ranging between 30,000 RUR and 300,000 RUR, with interest rate coming to anything between 49.9% and 59.9% a year. In addition, there is an incidental commission for handling the loan operations.

‘What is more, Lombard loans are becoming increasingly popular, despite the fact that the interest rate is even higher there. The problem is, such emergency borrowing is now enjoying demand only among a limited group of people; besides, it implies greater risks for the bank itself. I’d like to hope that the above-mentioned limited group of borrowers is not going to expand because all the other sources of income disappear. But we will have to put up with the greater interest rates on loans, I’m afraid,’ he added.

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