The volume of loans local banks "exported" to the balance sheets of their parent or sister banks revolves around three billion euros, according to Dan Pascariu, HVB-Tiriac chairman.
"The slowdown in foreign currency lending is just a tale. We found the solution of credit export to offset both the capping by the NBR of the foreign currency loans and the increase in the minimal mandatory reserves," Dan Pascariu told ZF.
He says HVB alone has exported over 700 million euros' worth of loans thus far.
"Through the restrictions imposed on lending in foreign currency, NBR has moved a monitored phenomenon to an uncontrollable area, losing the statistics instrument that monitors lending in foreign currency. It is hard to make an estimate of the total amount of outsourced lending," Mihai Bogza, Bancpost chairman says. He reiterated that Bancpost was outsourcing loans, too, to be able to continue to meet the customers' demand without imposing cost increases caused by NBR's administrative measures. Steven van Groningen, chairman of Raiffeisen Bank, in turn said his bank transferred part of the corporate loan portfolio to Vienna, mainly in the last part of 2005.
Statistically, the respective funding ends up showing in the private foreign debt volume. The first "exports" occurred in October-November 2005, when some banks had been rendered unable to grant loans in foreign currency because they were already above the cap set by the NBR (three times the value of their own funds). Since a capital increase takes quite a while, the handy solution was to move credits to the balance sheets of the parent banks. From September through December 2005, the volume of long-term private foreign debt rose by 1.5 billion euros, while the July 2006-July 2005 increase is of 3.7 billion euros. As far as short-term private foreign debt is concerned, the March-June 2006 period witnessed a real leap, when the volume went up by nearly 1.4 billion euros.
The export mechanism is quite simple: the customer comes to the bank and gets the loan application file put together. In case the application is approved, the loan and the customer in question are handled by a bank abroad that is part of the same group. In exchange, the local bank gives the foreign bank guarantees that fully cover the principal and interests of the loan and the foreign bank obviously executes the guarantee in case of default. The risk here has nothing to do with the balance sheet, bankers say.
Whereas local banks make the balance sheets of the parent banks rich, NBR proudly announces that the share of the foreign currency loans in the total of non-government lending has constantly declined from 60.5% in March 2005 to 47.6% in June 2006, "as a result of the efficient application of the entire set of measures."
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