Although in recent years Romania has been the largest non-performing loans (NPL) seller and the system-wide rate fell below 10 percent, the European Banking Authority (EBA) puts the country in the high risk category because is still above the red signal threshold set at 8 percent.
This contributes to the fact that more than half of the banks in Romania are above this signal value.
The rate of non-performing loans declined to 9.8 percent in January 2017 and the EU-average (5.4 percent in September 2016). However, Romania is remarked by the fast rate of NPLs over the past three years.
“Banks have continued to remove non-performing loans from their balance sheets starting with the last quarter of 2016, declining by 3 percent to RON 25.1 billion (January 2017). Write-off loans volume remained relatively constant (RON 17 billion, January 2017), accounting for 73 percent of the loans for non-financial corporations,” National Bank of Romania’s Financial Stability Report reads.
Four banks – with a cumulative market share of about 50 percent – concentrated 65 percent of the volume of out-of-balance-sheet loans. The sale of bad debts reaches EUR 2.5 billion in 2015 and EUR 1.4 billion in 2016.
The relevant indicators, such as bad credit rates and restructuring rates, are the only ones that still place the Romanian banking sector together with many other EU countries in the red signal line of the Risk Map developed by the European Banking Authority.
The most risky countries in this respect are Greece, Cyprus, Portugal, Italy, Ireland, Bulgaria, Hungary and Romania.