Volksbank concentrates half the loans in Swiss francs on the market

Austrian-held Volksbank has got loans in Swiss francs worth the equivalent of 1.3 billion euros in its balance sheet, which account for around half the overall loans granted in this currency on the Romanian market. The bank is therefore exposed to the problems generated by the franc's dramatic appreciation against the RON recorded over the last two years, by 45%, which translates in a similarly heightened payment effort on the part of clients.

Volksbank used the alternative of franc-denominated loans, which had the advantage of displaying very low nominal interests in order to facilitate the fast growth of real estate loans of the past years. At the end of last year, these loans accounted for 44% of the bank's overall financing portfolio, of 3.1 billion euros, according to data published in the Annual 2009 Report. Another 50% of the financing was in euros.
Around 83% of loans granted by the bank were retail loans, and were mainly real estate loans. Corporate loans totalled 500 million euros, almost half of which were granted to real estate companies. Over the course of last year the volume of loans fell by 14%, from 3.6 billion euros in December 2008. At the end of March 2010, the share of loans rated as doubtful and as loss had climbed to around 22% of overall loans, according to a report published by the Volksbank group in Vienna, from 18% at the end of 2009.