The strategy of bankers to protect themselves from the crisis was to increase the cost of loans for the good payers and cut interest rates paid to depositors to be able to stomach the losses caused by the loans they cannot get back. This is the conclusion of the National Bank in its 2010 Financial Stability Report.
The increase in provision spending to offset non-performing loans has always been an excuse used by bankers to make loans more expensive. Such raise, however, did not only affect the new loans but also the outstanding ones, thus putting more pressure on those customers making an effort to not fall behind with their instalment payment, despite the price increases they have to deal with and the salary cuts, or the collapse of their markets in the case of corporate clients.
"The increase in interest margins on RON and foreign currency, the sale of immobilised assets and the buying of T-bills were among the most frequent strategies applied by banks to improve their short-term financial position," the authors of the NBR report say.
Such a policy, however, could turn out to be counterproductive in the long run.
"With their pricing policies in recent months, a number of banks will stand to suffer in terms of their relationship with their clients in the future. You can rely now on the client being captive and having no choice but it remains to be seen if, once freed up from the burden of the loan, they will return to you as a bank," comments Radu Crăciun, Eureko Pensii chief investment officer.
The strategy of bankers to protect themselves from the crisis was to increase the cost of loans for the good payers and cut interest rates paid to depositors to be able to stomach the losses caused by the loans they cannot get back. This is the conclusion of the National Bank in its 2010 Financial Stability Report.
The increas
