Law on debt discharge could lead the banks to invent a new product

Banks will have to invent a new product similar to that of leasing, if the law on debt discharge will be adopted, bankers said.

“Look how a real estate leasing product looks and you will understand how will be or what are the conditions the clients could access a loan of this kind,” Razvan Radu, Country Chairman of UniCredit in Romania and CEO of UniCredit Bank announced in a press conference on Wednesday.

In his opinion, law on debt discharge could be applied to a new type of product, and at the same time to be maintained the current mortgage lending product, allowing the customers the possibility to choose.

”The high impact comes not from those with small loans and who will be less willing to sell their house to stay elsewhere with rent and to be subjected to very high volatility of rents in the coming years. (…) We estimated the impact as coming, especially, from those who have made investments in holiday homes, land, apartments (…),” Radu explained.

A recent analysis conducted by the largest player in the domestic banking system, regarding the impact of the draft law on debt discharge (ed. note: draft law on debt to equity swap) shows that, considering the current situation of the market, where only 1 in 10 customers have the opportunity to submit an advance of more than 30 percent of the property value, the number of eligible customers will decrease by 60 percent over the next five years, from 270,000 to 110,000 customers.