Banks lack prudence when granting Swiss franc loans, official warns

Granting Swiss franc credits in Romania is a foolish thing to do and BRD-SocGen is not going to grant such loans, the head of Romania's second lender by assets, Patrick Gelin said.

The official is resuming a theme previously tackled by the Central Bank of Romania (BNR) governor, Mugur Isarescu. The BNR official emphasized people do not know of the risks they face when getting such a credit.

The BNR governor explained Swiss franc loans offer low returns. Investors offer such credits during financial turmoil periods, when the need to strengthen the Swiss franc exists.

A powerful Swiss franc against the leu results in more expensive credits taken in the mentioned foreign currency. Several banks in Romania grant Swiss franc or yen loans, these offering low returns because the reference rate in Switzerland and Japan is smaller than the one in the Eurozone.

Foreign currency credits hold a 53 percent share in the total private lending.

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