ROMANIA: Economic Crisis to Hit Romania in 2009-2010
19.11.2008 Business | Interview | Reports and Analyses | Romania
Banks call on BNR to change crediting regulations to unlock mortgage market.
He also said that the loan market is blocked for now, and the only chance for economy to recover is a private market and not state-coordinated infrastructure investments.
Separately, commercial banks will call on the National Bank of Romania (BNR) to change the personal loan regulations, since the new terms have locked mortgage loans, the president of the Romanian Bankers Association (ARB), Radu Ghetea, said. ‘These modifications prove extremely harmful as to home loans. After the application of the stress test, of the new algorithm, very few customers still qualify,’ Ghetea said. ‘We believe that the indebtedness degree being lowered will lead to the unlocking of the mortgage market,’ Lucian Anghel, chief economist at the Romanian Commercial Bank (BCR), said, adding that the credit market will relax in the second half of next year.
On the other hand, the ARB president maintains that he sees the new regulations as beneficial for consumption credits.
The banking community believes there should also be taken fiscal measures among which VAT reduction or scrapping for some major activities, even in the field of home constructions.
On the other hand, the BNR official also said Romanian banks, most of whom are held by credit institutions from European Union countries saw they no longer get resources from parent banks and are focusing much stronger on the domestic market, with savings becoming a priority.
Vasilescu called the rise to EUR 50,000 of bank deposit guarantees a happy decision which calmed down things in Romania, yet, the threshold should not be increased to EUR 100,000 as discussed in the EU.
The central bank is entitled to call the banks which unjustified rose interests, given a 3.5 times difference between the passive and active interest rate, since it is not right for banks to pass their mistakes on to their customers, the BNR governor’s adviser said, who added that BNR is nonetheless convinced commercial banks should be defended, as they are ‘a money store’ that needs to be supplied and credit is the banks’ principal capital.
The BNR official said that the Romanian market is advancing to a state of normality, in which the central bank furnishes liquidities to the commercial banks, and when there was liquidity in excess the situation was abnormal.
On another hand, Liviu Voinea, Executive Manager of the Applied Economy Group (GEA), estimates that the fall of crediting in Romania will definitely conduct to a significant slowing down of the economic growth. Voinea explained that the most dynamic sectors of the Romanian economy – constructions and retail, which had the most important contribution to GDP’s growth, are by far the most indebted. He also added that the population will not have any longer the same growth of the revenues, of 20-25 per cent in the past few years, nor the same expectations in terms of growth of revenues, which will reduce the appetite for loans.
by Monica Apostol