Banks continue to tighten demand for collateral when lending to companies, central bank says

Publish date: 04-06-2009
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Requests for guarantees were revised in the first three months of the year by most banks in their analysis of the lending files for companies, for the fourth quarter in a row, on significant corrections of the prices of real-estate assets, a quarterly poll of the central lender BNR shows.

The most visible modifications are with respect to the reduction of the maximum maturity in granting loans and to the increase in the premium solicited for riskier credits.

Following these evolutions triggered ever since the beginning of 2008, the growth rate for loans granted to companies braked its advance significantly, from an annual rate of 53.92 percent in March 2008 to 19.92 percent in March 2009.

The BNR poll among the most important banks on the market shows that the aggregate demand for new loans from companies shifted to the negative side for the first time, underpinned by a shrinking economic activity (which led to a diminished need for financing) together with the modification of contractual clauses.

The real-estate sector was seen by creditors once more as the riskiest economic branch, followed by constructions, transportation, communications and tourism.

The lending norms were harshened in the first three months of last year for the population as well, both for mortgage loans as well as for consumer loans.

As a result, the average levels of the maximum degree of indebtedness and of the weight of credit in the total acquisition value dropped in the first quarter compared to the last three months of 2008.

Romania's economy shrank 6.4 percent in the first three months of the year, according to preliminary data of the country's statistics body INS.


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