The European Central Bank (ECB) has requested the National Bank of Romania assess the exposure of banks in Romania to the commercial real estate market based on two detailed questionnaires, as part of a process carried out in all EU member states.
In order to answer ECB's request, the NBR in turn asked thirteen banks with significant operations on the real estate market to fill the above-mentioned questionnaires within one week, which is until May 28.
These banks are Volksbank, ABN Amro Bank, Alpha Bank, Bancpost, Banca Transilvania, BCR, BRD, Banca Romaneasca, CEC Bank, Credit Europe Bank, Piraeus Bank, Raiffeisen Bank and UniCredit.
ECB wants details concerning the strategy and risk appetite of the banks that fund commercial real estate projects, about the lending and control standards the respective lenders apply, and about their risk management procedures. ECB is also collecting information to outline the expectations of the banks towards the trend of the real estate market over the next three years, as well as an assessment of the liquidity of the market over the last three years, both in terms of investors and in terms of banks' capabilities of granting funding.
Besides the qualitative issues, ECB also wants detailed statistical data about exposure to the real estate market: the number of experts by types of clients, by geographical areas, by types of projects financed - residential, office and retail.
Each type of data has to be supplied separately for the projects financed directly by a bank, for those carried out by investment funds that got money from the bank and for the projects financed via structured products, i.e. securitisation of receivables.
In particular, ECB wants to know whether banks plan to secure real estate assets, but cannot do it under the current international financial circumstances.
At the same time, the banks surveyed have to explain how exactly they make sure that the standard appetite for risk shows in lending policies and how exposure caps to sectors and sub-sectors of the real estate market - residential, offices etc, are set and controlled.
Last but not least, the banks have to supply information about how they evaluate exposure.
As for risk management, ECB wants to know what kind of information a bank demands from customers during the loan and how often it asks for such information, how it assesses and monitors the refinancing risk and whether it conducts evaluations on each exposure separately or not.
The information requested by the ECB is not normally included in the standard reports commercial banks have filed with the NBR, which means the NBR first has to get it before it performs the evaluation requested by the Banking Supervision Committee of the European System of Central Banks.
The respective data will also be useful for internal financial stability assessments conducted by the NBR.
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