The inevitable occurred: CHF currency topped RON 4.5 threshold. Converting credits means insolvency for banks, BNR says

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The national currency came back on a downward trend against the Swiss franc. The National Bank of Romania (BNR) set on Wednesday, an exchange rate of RON 4.5054/1 CHF, an increase of 0.70 bani (1.57 percent) compared to the previous day, when a Swiss franc was traded at RON 4.4354.

Regarding the single currency, the central bank has calculated a rate of RON 4.5110/EUR, up by 0.73 bani (0.16 percent) compared with the value of RON 4.5037/EUR fixed on Tuesday’s meeting.

Also, the Romanian Leu depreciated against the US dollar by 2.09 bani (0.54 percent) to a reference rate of RON 3.8989/USD, compared to RON 3.8780/USD, as established the previous day.

 

Cinteza, BNR: Converting credits at mandatory exchange rate, ruin for banks

In an attempt to find a favorable solution to those who have loans in the national currency of Switzerland, it occurred the idea of credits conversion from CHF to RON.

According to Nicolae Cinteza, the director of the Supervision Department of the National Bank of Romania (BNR), legally imposing the conversion of credits from Swiss francs to lei or other currencies could result in bankruptcy for several banks; such a normative act should clearly specify who takes the losses generated by the conversion of a different exchange rate than the current one.

“The problem exists and I fully agree it should be solved, but it’s not possible through a normative act. The solution (ed. note for Swiss franc debtors hit by the recent surge of this currency) is only possible based on talks between the banks and the customers. (…) Any decision taken by a normative act results in losses, so any normative act should clearly specify the entity that takes the losses. There are several banks that could be ruined if the conversion is made at the historical exchange rate. It was mentioned here that the volume of credits in Swiss francs does not represent a systemic risk; but the bankruptcy of a bank does,” BNR official stressed during debates on Wednesday at the Chamber of Deputies on credits in Swiss francs, Agerpres informs.

He underscored there are 14 banks having credits in Swiss francs in their portfolios. Not all of them, however, raise issues for BNR’s Supervision Department.

Cinteza mentioned that losses resulting from the conversion of credits at exchange rates different from the market quotations could be covered from banks’ capitals, by reducing the interest rates on clients’ deposits or from higher costs for the credits of those who pay.

The central bank official also reminded Hungary’s case, sometimes mentioned as an example for Romania; he explained that in Hungary it was the state that took the losses, not the central bank. The Hungarian state offered forints to the central bank to cover its expenses from the foreign currency reserves incurred to allow the conversion of credits in Swiss francs at a fixed exchange rate.

A normative act adopted today for the Swiss francs debtors might bring tomorrow a problem of those who have debts in euros, because the single European currency also surged from RON 3.13 in 2007 to approximately RON 4.5 now, Cinteza concluded.

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Black Zonure SRL
UniCredit Bank. Swift: BACXROBU
RON: RO84 BACX 0000 0022 3589 1000
EURO: RO57 BACX 0000 0022 3589 1001
USD: RO30 BACX 0000 0022 3589 1002

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