The banks must to regain customers’ confidence and restart lending. According to National Bank Governor Mugur Isarescu, a large number of litigation in court with clients, will force them to raise their capital according to EU rules.
“The country’s macroeconomic situation is among the best in the past 27 years, but there are also higher risks,” Isarescu stated on Monday in the Financial Market Forum, organized by the Romanian Banking Association.
According to him, the financial situation of the banks has strengthened. We can talk about a restart of credit.
“With a prudent mix of policies that we strive to ensure, the economic growth way could be taken up by lending. After the financial crisis, the resumption of lending is not the first, and the increase is not based on credit. The fact that we have had a decrease in financial intermediation in recent years is not far from a European and global financial scenario. As fiscal and monetary policies become less stimulating, the growth can be made on credit,” Isarescu explained.
He also pointed out that, currently, bank solvency is very high, of about 18 percent. The savings in Romania are higher than the loans given by banks in Romania. The cash excess, exchange rate’s stability, low interest rates, should stimulate lending. At the same time, the bad loans portfolio has declined to about 6 percent. However, there is still a problem: the very large private debt and the very small non-governmental credit.
“What we have to do? Be more active! You must regain public confidence!” Isarescu urged.
Another problem is represented by the litigation in court. A bank that has too many litigation needs to increase its capital, according to European standards. “You need to find ways to negotiate with your customers!” central bank official also stated.
He wanted to make it clear that the banks are not charities. They offer loans to get the money back.