Bankers' debate: How big is the risk of euro-denominated mortgage loans?
Nearly 95% of mortgage loans granted by bankers are in foreign
currency - usually in euros and Swiss francs - which leaves clients
exposed to the foreign exchange risk, which Mişu Negriţoiu, head of
ING Bank, called "a time bomb" at the beginning of the week. His
position is surprising considering that bankers have sought on
numerous occasions to persuade customers that the euro is the only
solution for long-term credits, and the NBR has tolerated this
approach.
The main argument that persuaded customers to take out
foreign-currency loans, especially when it came to large amounts
and long maturities, was the interest rate differential. The high
interest rates on RON-denominated loans made mortgage financing in
RON almost prohibitive, argue bankers, who have, however, found
outlets in euro-denominated loans and even in Swiss francs, at one
point. Foreign-currency financing was much easier to obtain from
foreign shareholders or from international markets, at very low
prices, so even players that had not yet made a name for themselves
and that had relatively small networks compared with the old banks,
were able to pursue market share on the retail loan segment.