75 pc of banks expect the law on debt to equity swap to lead to moderate decline in the price of housing, survey says

Three-quarters of banks (75%) expects the law on debt to equity swap to lead to a moderate decline in housing prices, while 20% of them predict a significant cheapening, according to the ARB & EY Banking Barometer – 2016 edition.

Only 5% of banks believe that this law will not affect the price of housing.

Banks consider that some local legislative initiatives are among the main issues that negatively affect the Romanian banking system and/or the ability to meet their role in the economy (67% say to a great extent).

A percentage of 50% of the banks anticipate medium to large consolidation of the banking industry in the next 12 months, similar to 2015, according to the ARB & EY Banking Barometer. On a three-year horizon, the percentage increases to 90% and for the same horizon 30% of banks expect a large-scale consolidation as compared to 40% last year.

“The Romanian banking system has demonstrated structural stability, its activity indicating an adequate capital risk. The developments anticipated by this study in the Romanian banking sector are considering maintaining its resilience and draw attention to the potential risks coming from the legislation far from the European approach,” said Sergiu Oprescu, chairman of the Board of Directors of the Romanian Banking Association (ARB).

EY Romania has developed, based on a partnership with ARB, the banking industry index called ARB & EY Banking Barometer, through a questionnaire conducted with the Management of the banks members of the ARB. Banks surveyed account for a market share, in terms of assets, of approximately 90%.

The ARB & EY Banking Barometer is conducted annually by ARB members and an information tool for the bankers regarding the way bank leaders in Romanian banking system see the developments concerning the economic, legal and business environment and the implications on banks which they manage.