Banks cannot ignore the harshening of the lending terms and the heightened risk caused by the fact that Romania is "below the red line" of the group of investment grade countries, says Petre Bunescu (photo), BRD vice-president.
"We don’t sell potatoes, we lend money and messages like ‘there needs to be plenty to go around’ do not work here. The costs at which we get financing undoubtedly reflect the sovereign risk and the solution is to make efforts to get back above the red line."
The banker says that this is why the decline of the international euro reference rates (EURIBOR) cannot be found in the cost of loans granted on the local market.
"I have the added cost of CDS on top of the minimal mandatory reserve cost, which leads to a total entry cost of about 9%. Banks, however, are making efforts to lower their interest margins," Bunescu says.
On the other hand, he feels the deposit rate raise is natural in such times, although it does drive interests on loans up. "How can one consolidate the internal resources if one does not offer interest rates accordingly? I believe this pressure will gradually calm down."
As other bankers do, he believes the current tension on the market has a psychological component, as well, which amplifies the reactions of the clients that had been accustomed to better lending terms until recently.
At the same time, he says banks are not looking to put clients out of business or resort to compulsory execution against individuals who lose their jobs.
"We at BRD analyse the loan portfolio file by file, preparing specific measures for individuals, SMEs or big clients to go through this difficult period. If some SME had its exports go down, I’m not going to demand all the money back, but extend the maturity, do something to make debt service leaner. If an individual client has a seven-year loan and paid as
