Banks set up loan loss provisions worth above 5.3bn euros (theRON equivalent) by late September, covering almost 11% of theamount of private loans.
Each quarter of this year, banks set aside 2.5bn RON to keep upwith the rising risk of not recovering lent money. The provisionbuilding pace sped up from last year, when the average stood at1.7bn RON per quarter.
As the weight of doubtful or loss loans went beyond 20% in lateSeptember, the provision volume climbed to 22.6bn RON (around 5.3bneuros), marking an increase of above 75% from a year ago.
Since the start of the year, bankers have piled up credit riskreserves worth almost 7.7bn RON (1.8bn euros). Pressure generatedby the deteriorating loan portfolio quality has been kept highsince the beginning of the year. Despite some initially upbeatexpectations about the economy picking up in the second half, thewave of insolvencies among corporate clients, then the announcementabout the public sector salary cuts and the VAT hike triggered newloan late payments.
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