NBR: Bankers navigated crisis by dumping the burden on customers
The strategy of bankers to protect themselves from the crisis
was to increase the cost of loans for the good payers and cut
interest rates paid to depositors to be able to stomach the losses
caused by the loans they cannot get back. This is the conclusion of
the National Bank in its 2010 Financial Stability Report.
The increase in provision spending to offset non-performing loans
has always been an excuse used by bankers to make loans more
expensive. Such raise, however, did not only affect the new loans
but also the outstanding ones, thus putting more pressure on those
customers making an effort to not fall behind with their instalment
payment, despite the price increases they have to deal with and the
salary cuts, or the collapse of their markets in the case of
corporate clients.
"The increase in interest margins on RON and foreign currency, the
sale of immobilised assets and the buying of T-bills were among the
most frequent strategies applied by banks to improve their
short-term financial position," the authors of the NBR report
say.
Such a policy, however, could turn out to be counterproductive in
the long run.
"With their pricing policies in recent months, a number of banks
will stand to suffer in terms of their relationship with their
clients in the future. You can rely now on the client being captive
and having no choice but it remains to be seen if, once freed up
from the burden of the loan, they will return to you as a bank,"
comments Radu Crăciun, Eureko Pensii chief investment
officer.