BNR published the draft regulation for curbing FX retail lending

The main proposed changes are: i) down-payment for EUR denominated mortgage loans should be at least 30% while for those denominated in RON the threshold is 15%, ii) FX denominated consumer loans should be collateralized by at least 133%, iii) consumer loans might have a maximum tenor of five years and iv) when assessing the client's creditworthiness, the bank has to run a stress test which assumes a 35% depreciation of RON against EUR. It is obvious that these proposals will act as a drag on the loan growth if they are approved like this. We view this proposal as neutral for the listed banks' shares since it has been announced for several months while some of these proposed changes might be watered down and they are not applicable to the Government sponsored program to prop up the real estate market. Moreover, Banca Transilvania (TLV) which has a stronger presence on the RON denominated loans segment will be relatively less impacted than some of its foreign owned competitors like BRD-GSG.

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