13 banks can grant loans without considering BNR's restrictions

There are only four days till the new loaning norms will enter in force. More harsh conditions, higher costs for loans and fewer customers, these would be on short the effects of the new regulation imposed by the central bank. While the bankers complain that BNR let them without “the object of work” and the analysts forecast the end of “taking credit with the ID”, a third of the banks that activate on the Romanian market continue their activity without taking into account the restrictions of the national bank. These are the subsidiaries of the foreign banks from the EU member states that activate according to the rules of the mother – banks.

Starting next Monday, the commercial banks from Romania will grant credits according to the new harsher rules. It’s the data since which the new BNR regulation “concerning the limitation of the risk credit for the credits directed to natural persons” will enter in force. A “black” day for the credit market from Romania, say the bankers that believe that their activity will be seriously damaged. Fact confirmed also by the BNR officials that sustain that the new rules will reduce the growth rhythm of loaning with 10-12 percentage points till the end of the year. “The impact of the new rules will be different from one bank to another, depending of the risk profile which each has assumed till the present. The regulation will act different from one subportfolio to another, depending of some main parameters: the period for granting the credit, the destination, type - consumption or mortgage, and also the currency, respective lei, euro or other currency”, Ion Dragulin director within the division of financial stability of BNR stated. According to the data supplied by the central bank, at the end of August, the total value of the credits in lei granted to the population was figured to 40.246,9 million lei, in increase with 2,4% against July and with 34% against August 2007. In what concerns the credits in currency, these totalized the equivalent in lei of 50.311,7 million lei, with 3,7% more than one month ago and in increase with 86,7 comparative with August 2007.

If BNR is expecting to a slow down of the increase rhythm for loaning, especially for currency, the bankers say that the new norms will have as main effect the reduction with up to 30% of the credit’s value that can be accessed by a customer. So, a person that can now obtain a credit of 100.000 euro, will have access starting with Monday only to 70.000 euro. More, the credit with ID will disappear for making room probable for “the credit with fiscal file.”

The common denominator of the new rules for crediting is by far the bureaucracy. The central bank has focused on more documents at file, and also on examinations over examinations that will finally direct to the increase of costs for loans, and especially to the increase of the period in which a customer can receive the loan. Beyond those three requests of which was spoken lately, the fiscal file, limiting the revenues taken into account and calculation of the differentiated indebt level - there are still other obligations for banks having as purpose to offer to the customer a more clear image of the final costs of loan. So, the banks must reorganize the activity and to make a clear distinction between the promotion and sale of banking products against the credit risk analysis and monitoring the exposure. So, the credit officer, till now good for everything, can’t say anymore to the customer what credit suits him the best. In what concerns the calculation of the indebt level, the central bank seems to have dropped to the stress-test. Because the substance of the problem remained, while each bank is forced to take into account when calculating the maximum level of indebt of the category in which the customer belongs, the destination of the credit, consumption or mortgage, the type of credit deducted depending of the currency, of the type of interest rate flat or variable, the granting term and of “the behavior of the customer related to honour the service of the debt determined by the quality of guarantee”. Also at the chapter indebt level it must be taken into account the currency risk, of the interest rate risk and of the possibility of increasing the cost of the credit as a result of increasing the commissions. And here interferes that apocalyptical scenario, of which was spoken, when the bank must present to the client how would be the situation in which the interest rate would reach to the highest level recorded in the last months, also for the exchange rates and other costs of credit. For certain is that banks must assure that during the entire period of granting the loan, the total indebt level of the applicant doesn’t’ exceed the admitted maximum. What in ”people terms” means death of promotions, the banks not having other reasons, except of drawing in the customers or offering smaller interest rates for short time.

Of those 42 commercial banks that now activate in Romania, 13 are in regime of subsidiaries of some foreign banks and another Citibank is in progress of being transformed into subsidiary. Of these, five although have received the BNR approval to activate on the Romanian markets, from several reasons they haven’t started yet the activity. Some of these are confronting in the mother country with problems caused by the international financial crisis that will surely delay the plans for Romania. The list of the subsidiaries includes names such as ING, ABN Amro, Garanti Bank or Italo-Romena. All these operate according to the rules of the mother banks, and the BNR rules don’t influence their activity. For example, to ING, a housing credit can be accessed by any person that has minimum 21 years, family net revenue of at least 1.200 lei for the national currency and of 1.800 lei for euro and length of service of minimum one year. The advance is between 0 and 25%, depending of the type of loan, the reimbursement period can reach to 30 years and the effective annual interest rate for euro is of 9,23%. At ABN Amro-that stated to be ”in transition”, the advance of 25% for a mortgage credit is compulsory and the interest rate after the promotional period can reach to 7,15% for euro, to which are added the commissions afferent to the loan.

The analysts recognize that the effects will be on short time 3-6 months, after which the banks will adapt their portfolio to the request of the central banks and the major impact will be felt at the level of the credits in currency. On brief, it is spoken about fewer credits, but more expensive, the most affected being the mortgage ones or the housing ones. This will automatically direct to the decrease of the prices on the real estate market, that isn’t necessarily a bad thing if we take into account that many of the apartments are being sold at prices for villas. A measure of stepping out from the impasse, will be the extend of the period of granting the credits. So there will appear credits on periods of several generations. Moreover, accessing the loans from the mother banks, that till now proved to be impossible, it could become real.

At macroeconomic level the connected positive effects will aim the commercial deficit on the segment of imports of durables directed to households, it is shown in an analysis of BNR. The analysts of this bank say that it remains to be seen if this administrative measure will affect more the consumption credits, one of the engines that determined the increase of consumption in the households during the last quarters, or much more the mortgage credit. In a more pessimistic scenario these measures could direct to a break of the economic increase in 2009, a neutral labour hypothesis indicating only a moderate slowdown.