The losses generated by the adoption of the giving in payment law will be much more important for the whole society than those to be directly incurred by commercial banks, because the future customers, the business milieu, depositors will be affected, and even the borrowers who managed to make their loan repayments, says the Chairman of the Romanian Banks' Association, Sergiu Oprescu.
Photo credit: (c) Angelo BREZOIANU / AGERPRES photo
"The National Bank of Romania has come up with a figure of possible impact [on the banking system], of 2 to 4 billion lei. We do not comment on it as it includes references to the complex portfolios of all banks. Obviously it is a loss to the system. Can the system cover it? Clearly, yes. But this is just the first step of impact. What happens next? (...) After the promulgation of the law, homes will be given in payment , the banks will have to sell them, the supply on the market will increase. To protect themselves from risk, banks will tighten lending conditions ... Thus, the supply increases, the demand drops, prices drop, and when the price falls also other customers, who until then were repaying their loans, will be stimulated to resort to this law. Where does this vicious circle stop? Who pays?" Sergiu Oprescu told a Thursday's press conference attended by several presidents of banks.
He explained that, in a first phase, banks will have to establish provisions to offset the risk arisen from this law, even if there are not yet properties given in payment, and this fact will diminish the banks' resources to allocate to new loans.
On the other hand, he admitted that banks can do more for the real social cases. "But this can done only by dialogue and analyzing each case," added Oprescu.
In turn, the Chairman of the Bank Employers' Council of Romania, Steven van Groningen underscored the idea that the "real" loss following the application of this law is not for the banking system, "but for Romania in general." "At the international level, if we show that the ownership right is not respected, the impact will be much greater for Romania than for the banking system," said van Groningen.
Additionally, van Groningen said that the law must clearly define the social case because the introduction of the 150,000-euro ceiling is a step forward but "we cannot stop here."
As to the loans extended under the First Home Programme, a solution for the banks to be still interested in extending them would be the state's guarantee should remains valid even if the home is given in payment, explained the Romanian Commercial Bank's President Sergiu Manea.
He added that customers' interest in this programme is obvious, given that the relevant applications have increased fivefold from November 2015 to January 2016. AGERPRES (RO — author: Ana-Maria Vasile, editor: Mariana Nica; EN — author: Bogdan Gabaroi, editor: Razvan-Adrian Pandea)