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Lending – Crediting in Romania slows down at 44.8% in Oct. on less foreign currency loans

Lending to people and companies in Romania tempered to 44.8 percent in October from 50.5 percent in the previous month after drop in foreign currency credits which were more expensive, following the new rules limiting risks recently adopted, the central lender BNR announced.

Lending braked a steep 19 percentage points in the past four months, from 63.4 percent in June. The main reason behind this fall is the new set of rules created by BNR in August to confine risks and which was first applied in October. The central lender asked banks to be stricter in granting loans and require tax records of clients before establishing the maximum indebtedness level.Crediting totaled 193.06 billion lei at the end of October, a 0.6 percent fall in nominal terms over September. Loans in foreign currencies reduced 1.5 percent month-on-month to 107.21 billion lei. Yet, calculated in euros, these loans added a slight 0.4 percent in October, BNR revealed.

However, lei loans nudged up 0.6 percent month-on-month in October to 85.85 billion lei, 44.47 percent of the lending this month. People borrowed 0.9 percent more in national currency from banks in October against September to 41.38 billion lei. Over last year's similar period, lei loans grew 29 percent.On the other hand, credits in foreign currencies to individuals, which have accelerated rapidly throughout the year, dropped 1.2 percent in October over September to 54.39 nillion lei.

Lending of local municipalities grew from 33.2 percent in the ninth month this year to 35.2 percent, to 12 billion lei, BNR also showed.Last week, the central lender announced it will revise the new set of rules regarding crediting to help unlock lending in Romania and after bankers asked it to. However, BNR stressed the focus will be on real estate lending, not consumer credits.In the past month lending in Romania has been mostly blocked in the background of the financial crisis which is hammering big financial markets but also poses threats for emergent ones, such as Romania.

The new lending norms imposed by BNR slashed 5 percentage points off the maximum degree of indebtedness accepted by banks and few persons can still qualify for a mortgage loan, bankers complained last week.But the market context was different when the new rules were drafted this summer and nobody anticipated the current economic downturn.The credit in foreign currency will become more expensive and increasingly difficult to obtain in the upcoming period, but the cuts in the minimum mandatory reserves and the benchmark rate could lower interests for credits in lei.

The new set of rules approved by the central lender on August 22 require banks to carefully analyze the clients' payback capacity taking into account a level of incomes seen as eligible by customers, which cannot exceed more than 20 percent the previous year's level.Banks in Romania will require individual tax records of clients before approving a credit. Lenders will also establish a different maximum degree of indebtedness for each client, depending on the category of borrower, on the credit destination (mortgage, consumer etc.), on the type of credit (taking into account the currency, the interest rate, the guarantees) and also on the risks incurred by the lender, such as the exchange rate and the cost of credit.

Sursa: http://www.actmedia.ro

Tags: percent lending rules lender bnr credit billion banks which october romania crediting foreign currency loans month