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Isarescu:Market Worries Cause Lending Slowdown, Not Central Bank Rules

The lending slowdown in the last period was caused by the uncertainties on the local and international financial market, not by the central bank's new regulations regarding household lending, Romania's central bank governor Mugur Isarescu told a press conference Monday.

"The measure to stop lending, adopted by some banks was due to uncertainties on the local and international markets. The population has started to be afraid of the Romanian leu's oscillations," Isarescu said. Isarescu warned "those who say that banks cannot give loans due to the new rules of the central bank that the rules do not come from the central bank. It is an attempt to create diversion on the market." The governor said that the ascending trend of the lending rate would slow down in the following period."Of course the lending rhythm will decrease. The percent of 110% is too high, we should not consider something like that," Isarescu said, adding that it will be a mistake for the bankers to discourage lending in local currency.

Banks had to amend their loan norms in maximum 45 days from the date of publishing the new regulations regarding loans for natural persons. The deadline was October 6.

RON 2 billion was injected into the market Governor of the National Bank of Romania (BNR) Mugur Isarescu on Monday said BNR injected RON 2 billion in the market on Friday.'Some banks satisfied their need for liquidity, but others were left with unsolved problems, particularly foreign banks,' said Isarescu, assuring that interest rates will continue to drop.

Money Market Malfunctions Are TemporaryRomania's central bank governor Mugur Isarescu said Monday the recent malfunctions on the monetary market are only temporary and the market will solve them in time.Isarescu said that, when the interest rates grow much higher than the Lombard rate, the monetary market is malfunctioning.

Early Friday, overnight rates on the money market were at 19.00%-46.13%, while monthly rates stood at 14.53%-43.69%.The Lombard rate stands at 14.25% a year. Lombard is a short term credit facility granted by the central bank to lenders."The local currency was looked after, but not found on the market (...) The rate will not go below the Lombard rate immediately, as the banks that were cautious and did not look for market share do not want this advantage. However, these interest rates are temporary," Isarescu said in a press conference.Regarding Friday's situation, when the money market faced an acute lack of liquidity and interest rates for swap contracts reached 100%, Isarescu said that it was a technical situation and the speculators who anticipated wrong had to suffer."Those who anticipated wrong suffered. Technically, it is extremely clear what happened. All those swap contracts could no longer be financed, because there was no Romanian currency on the market," Isarescu added.

A swap contract is an arrangement in which two parties exchange specific amounts of different currencies initially, to be returned afterwards, and a series of interest payments on the initial cash flows are exchanged.The National Bank of Romania, or BNR, governor said that it "would be incomprehensible" for banks to pass these high interests to clients. "We, as a central bank, may not involve in competition issues, it would be unwise", Isarescu said. On the Romanian monetary market, interest rates soared once again on Monday, on an acute liquidity shortage, which led to the appreciation of the local currency against the euro.

Sursa: http://www.actmedia.ro

Tags: isarescu market banks interest rates governor central rules lending local euro bnr

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