Banks will start to grant credits at increased level hardly in spring

The mix formed by the financial crisis and the new regulation of the National Bank concerning the loans seem to be fatal for the crediting system in Romania. Even the bankers recognize it and they appreciate that if those two events hadn’t taken place in the same time, the loaning wouldn’t have frozen, it would have just slowed down.  October is considered one of the blackest periods since the post Decembrist loaning period, and November or the following three months don’t seem to be different.  

It’s difficult to say what has affected more the crediting system in Romania: the international financial crisis or the new regulations imposed by the National Bank of Romania. The bankers say that it would have been better if those two events hadn’t taken place concomitantly. And because the crisis can’t be controlled or scheduled, the new loaning regulations are the ones that should have been postponed. On these terms we would have probably assisted to a slow down of loaning and not to a frozen of it, how it is already happening. Despite the fact that some credit institutions aren’t promoting anymore their products, accessing a credit is a real luxury in Romania. Most of the banks have stopped long time ago granting credits in Swiss francs or even in dollars or euro. In what concerns the credits in lei, these have significantly risen in price during the past weeks. “In October, the loaning activity has purely frozen. How many Romanians ask for a credit and obtain it? It’s much too early to draw conclusions. This wave of loaning restrictions is has just started. There is a prudentiality tendency manifested both in banks and by applicants that I consider it would strengthen during the next period”, Raulca Dobre, financial analysts at IpoteciDirect says. Even if the banks have somehow retaken their activity they are being more cautious than ever. “So, at the moment the banks grant credits, but with a low indebt level, from 70 to 40-35%, mandatory minimum advance in case of the mortgage credits and diminish of the financing share to 50% of guarantees. Some banks have cancelled certain income categories, such as the ones derived by rents, bonuses, lunch tickets, dividends or the ones obtained from abroad.  In this context, many applicants are in the situation in which they aren’t eligible for taking the sums previously promised by the banks or they aren’t eligible at all for taking the credit. For taking the promised value or for increasing the chances to obtain the credit, the applicants must reorient to bring join debtors or to increase the loaning period”, Raluca Dobre added.

The experts say that during this period it will calm down the frenzy of the last two years for accessing a credit. “We estimate that on short term till the adjustment and convergence of the market conditions, the number of mortgage credits will decrease following afterwards to come back on an increasing trend”, Anca Bidian, General Director at Kiwi Finance says.  
 

Lock-up period till spring

The Raiffeisen Bank representatives say that the decrease is much stronger for the loaning in currency -here we are facing with the effect of rising in price of the financing and the impact of National Bank measures that favour the loaning in lei. “In this period we are all confronting with many uncertainties: if we don’t know the costs for accessing refinancing in the near future, if we don’t know what will happen in the real economy, if we don’t know what will happen in the real economy, if we don’t know how much the loaning risk increases, it’s normally to be all more cautious.  As a result, we advise the customers that want to obtain a credit to choose the products in the same currency with the one in which they obtain their incomes. For most of Romanians this means RON”, Radu Topliceanu, director at Aria Credite Persoane Fizice (Credit for Natural Persons) says.  

In what concerns the lock-up period most of the experts say that starting with the spring things will enter in normality. “It’s difficult to estimate the length of this period. In our opinion for retaking the increase of credits at levels close to the ones a few months ago it has as mandatory condition the decrease of the financing costs on the monetary markets, fact that would allow the banks to offer to the customers credits with lower interests rates than in present”, the officials of the Romanian bank say. The representative of Kiwi Finance considers that hardly after the loaning institutions will make public the boards on 2009 it will be known how much will last the blockage. “The entire economy is tensioned. I don’t know if we can speak about a blocking or of a total frozen of the loaning mechanism, but we are operating as if out of mistake we have entered in reverse gear but we are still trying to advance. Depending of the strategy which the banks will approach in 2009, we’ll be able to forecast the duration of this blockage”, Anca Bidian says.
 

Drops up to 40%

Roxana Gavrila, Director of Communication at CreditTeam sustains that in case of the lucky ones that have received a loan during this period, the approved sum was much smaller then the required one.  “During October we have recorded 1183 credit applications, of which 744 were approved (62,9%), 120 demands (guaranteed credits) are being still examined (10,1%), and the rest of 319 applications (27%) were rejected. In most of the approved cases (regardless of the type of credit) we can notice the decrease of the sum against the initial sum, while the rejected credits are mostly demands of non-guaranteed credits (personal needs without mortgage). Out of a requested total of 29,9 million euro, the approved total was figured to the equivalent of 16,2 million euro”, Roxana Gavrila mentioned.The representatives of Kiwi Finance also mention about a decrease by 40% in the volume of credits granted in October. “The decreases are different on categories of incomes and risk classes, starting by 20% to 80%, on balanced averages”, Anca Bidian said.

The slow down of the loaning is the result of multiple factors. It has burst out the crisis in America, the turbulences reaching also in Romania generating anxiety. During this period, BNR has imposed new loaning norms, more restrictive, strengthening the anxiety and setting up the prudentiality  maybe even exaggerate in case of some banks.

Raluca Dobre, financial analyst Ipoteci Direct

The new loaning regulations imposed by BNR are the result of the Romanian behavior consumption, and their implementation was hurried up by the international financial environment. The slow down of the rhythm for granting credits during this period is explained through many aspects and we can’t pretend the banks to change their products of one day to another, in a period in which the evolution of the international financial environment must be taken into account.

Roxana Gavrila, Director of Communication at CreditTeam

We have to do with a mixed effect of those two causes. During this period, it has superposed the decrease of the indebt levels accepted by the banks as a result of applying the new loaning regulations established by BNR with the increase of the financing costs, mainly euro, as a result of international financial situation deterioration. By mixing these two causes directed to the decrease of credit value which the clients can access.

Rrepresentatives Banca Romaneasca (Romanian Bank)

The new loaning norms, as well as the conditions on the monetary market are two of the reasons that sustain the estimation according to which the rhythm of the credit advance will continue to decrease also next year. The period we are crossing now is a temporary one, conjectural one, we are also expecting to a settle down of the market as soon as will be restablished the equilibriums at interna- tional level. The situation in Romania is indirectly connected to international turbulences that took place lately.

Anca Bidian, general director at Kiwi Finance

October and the first half of November marks a strong decreasing trend in demand for credits -the Romanians are more and more aware of the economic changes we are facing with and the behavior is starting to change, the loaning appetite being replaced by the one of savings.  Over this much expected change of behavior superposes the increased prudentiality of the banks that have revised the loaning politics.

Raluca Topliceanu, director Credits for Natural Persons, Raiffeisen Bank