Banks drop rates

COMMERCIAL banks have finally started competing against each other with their prime lending rates, as pressure from the Bank of Namibia (BoN) for lower interest rates mounts.

In a historic move, Standard Bank Namibia and FNB Namibia became the first commercial banks to drop their prime lending and mortgage rates by more than the BoN’s latest repo rate cut. In an extraordinary step, the BoN decreased its repo by 50 basis points to 7,5 per cent last week.Standard Bank Namibia yesterday slashed its prime lending and mortgage rates by 100 basis points to 11,75 per cent.FNB Namibia followed late yesterday afternoon with the announcement that they will cut their prime lending and mortgage rates by 75 basis points. Their new rates of 12 per cent become effective today.Bank Windhoek and Nedbank Namibia are yet to tell clients by how much they intend lowering their interest rates.The banks’ reaction came after BoN Governor Tom Alweendo last week said that the big difference of 475 basis points between the repo rate and the prime lending rate in Namibia cannot be justified when compared to similar economies.The BoN yesterday told The Namibian that the huge rate spread will be on the agenda when the central bank has its quarterly discussions with the Bankers’ Association of Namibia (BAN) next Thursday. (Also read report in today’s Bottomline.)jo-mare@namcom.na