Top 10 local banks reluctant to relax lending

The top ten-largest banks in the local system, which own some 80 percent of the market in terms of assets, are in no hurry to ease lending conditions in spite of a the decision by the National Bank of Romania (BNR), of relaxing mortgages. Some lenders even say they do not intend any regulation improvement due to financing costs and risks generated by the depreciation of the national currency. "We will not relax anything in this stage.

We are adopting a very conservative approach, until we have a clear perception. The market is more uncertain, which forces us to be much more cautious," Bancpost CEO, Mihai Bogza, told Business Standard. Banca Comericala Romana (BCR), BRD Societe Generale, Raiffeisen Bank, Banca Transilvania, and CEC Bank, are on stand-by, waiting for the BNR regulations which are to be published in the Official Gazette this week, and will make a decision regarding possible modifications later on.

The evolution of the market indicates an increased reluctancy of bankers, considering the cost of financing for banks surged seven percentage points, and the leu depreciated 30 percent compared to the average 2007 exchange rate. "The problem is determining the solvency of beneficiaries. There is an increased foreign currency risk and banks are facing higher costs," said the General Manager of ING Bank's subsidiary in Romania, Misu Negritoiu.

According the new rules, Romanians are free to access, as of this month, mortgages with a maximum degree of indebtedness of 60-65 percent, provided they make a down payment of at least 10 percent. However, most bankers were already aware that the Real problem is ensuring resources on the long-run, and not BNR's restrictive regulation. Central bank officials expected that only one quarter of the 42 lenders in the system will grant relaxed loans.

Business Standard