Unemployment is the main threat to the retail credit portfolios of banks, because the number of those to have lost their jobs is higher among bankable clients than the official figure for the entire country, says Razvan Munteanu, Raiffeisen Bank retail vice-president.

"The problem of non-performing loans has to do with unemployment first of all. The official unemployment rate is debatable, because the basis used to calculate it is not properly assessed. The percentage of those that lost their jobs among bankable clients is much higher."

In addition, Munteanu believes that the decline in incomes compounded by the increase in the monthly instalment especially for loans in foreign currency has contributed to the increase in non-performing loans. He says many companies have avoided explicit restructuring steps by resorting to wage cuts instead, which has affected the customers' repayment capability.

"Apparently, the accumulation of non-performing loans is about to occur, but the restructuring of the public sector may create a new shock. Unemployment will remain the most significant indicator. If it stabilises at the end of the first quarter or the beginning of the second quarter of 2010, then positive trends will follow."

Banking sources say Raiffeisen's share of loans rated as doubtful and loss in the total portfolio stood at 9.13%, by Romanian accounting standards, below the system average of 11.76%.

Munteanu believes that the increase in the maximum indebtedness of a client that the NBR's lending regulations allowed in 2007 has also contributed to the accumulation of non-performing loans, "but no one can say it is the root of this phenomenon".

The loans whose interest remains fixed for the first year only to go up significantly afterwards are not, as far as Munteanu is concerned, among the main culprits for the increase in the non-pe