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BNR new lending restrictions can trigger real estate crisis, say bankers

Application of retail lending restrictions in the form proposed by Romania's National Bank (BNR) could trigger a real estate crisis because it would have a 'special impact' upon the real estate credit, through a decline in lending, the Romanian Banks Association (ARB) warns in a letter sent to BNR prime-vice-governor Florin Georgescu, Ziarul financiar daily reads on Wednesday.

ARB letter to BNR also contains a revised draft of the Lending Regulations based on modifications wished by the commercial banks and represents the toughest bankers' protest against BNR new regulations proposals.

Up to now, the National Bank made no step backward as for the introduction of the new lending regulations, which stipulate that the clients' income should be verified on the basis of the annual fiscal declaration, when their lending application is analyzed and not based on some company issued certificates, as up to now.

The real estate market recorded in May and June the first declines in the number of transactions, the highest in June, of 5 percent, compared to the same month in 2007.

The bankers stood against the unitary application of restrictions, irrespective of the lending type, asking the central bank to use a different approach between the consumption credits and the mortgage ones, between those guaranteed and the non-guaranteed ones. There are also very big differences between a consumption credit and the mortgages, involving a different risk degree as for the non-payment of debts. The bankers said they were ready to pull the breaks on the consumption credit by reducing the maximum indebtedness degree. As well, they asked for the adoption of some individual measures from one bank to another in line with the client's lending portfolio and risk exposure, in case BNR is seeking prudential reasons through the new regulations.

The banks do not agree as well with the returning to a maximum indebtedness level of 40 percent in the period pending the approval by BNR of their own lending norms and asked to be allowed to apply those already validated by the central bank for the respective interval.

The bankers had a meeting at the beginning of last week with prime-vice-governor Florin Georgescu at BNR headquarters and subsequently teams of experts from the central bank and ARB discussed technical aspects.

Sursa: http://www.rompress.ro

Tags: lending bankers estate restrictions bnr