Bankers ask NBR to let them put less money aside for credit risk

Bankers are asking the NBR (National Bank of Romania) to allow them to take into consideration the entire value of guarantees held in order to reduce exposure to clients with overdue payments, after the deterioration of their credit portfolios significantly boosted their provision-related expenses. The overall banking system recorded a net loss of around 50 million euros, after provisions rose by 2.6 billion RON, to 10.2 billion RON (equivalent to 2.4 billion euros) in March. Currently, the NBR imposes tougher terms for setting up provisions than international standards (IFRS) provide for. The terms date back to the crisis of the Romanian financial system in the late 1990’s. Under the circumstances, bankers are more and more insistent in their call for the NBR standards to match those used internationally. Banks would also like the NBR to give up a regulation introduced around two years ago, according to which loans granted to individuals in a foreign currency other than that of their incomes should fall into the B risk class at the most, which entails setting up provisions amounting to 5% of the sum involved. Bankers cite the better quality of credit portfolios in foreign exchange, in comparison to those in RON.