Bad start of 2010 for bankers: provisions up 234 million euros

Bankers had to set aside 964 million RON (some 234 million euros) as provisions in January alone, given that the number of troubled loans continued to rise fast as more and more clients found themselves unable to repay their loans.

"Provisions went up from 14,966 to 15,930 million RON (3.8 billion euros i.e.). The quality of the loan portfolio worsened, overdue loans went up," Nicolae Cinteza, head of NBR's Supervisory Department told ZF. Loans rated as "doubtful" and "loss" (past due by more than 61 and 91 days) have come to account for 16.1% of the total loan portfolios. Early in 2009, they accounted for less than 7%. NBR believes that chances of instalment payment being resumed after an over three-month hiatus are practically non-existent and therefore requires banks to set aside provisions for the entire exposure to that particular client.

In the autumn of 2008 and the first few months of 2009 most of the problems were caused by consumer loans, as clients were hard hit by the increase in interest and exchange rates. Later, the focus shifted towards companies, where bankers were taken by surprise by a wave of insolvencies.