Responsibility should be taken for deficient bank management, and, in the hypothetical case where banks would transfer non-performing loans to the AVAS (State Assets Resolution Authority), the state should take over stakes in exchange for those assets, according to Sorin Popa, deputy general manager of BRD-SocGen.
"The rise of provisions, which we have noticed in the system, both on the segment of individual loans, and on the corporate loan segment, are partially the result of the uncontrolled rise of the business - pursued by some players in the past few years. If we were to talk about the takeover of non-performing loans by AVAS it depends on what terms it would be done and for what type of loans. Whatever happens, the state should take a stake in exchange, not just clean up banks with deficient management and let them carry on as they have up until now," believes Popa.
He says banks with a prudent management are not seeing an "alarming" rise in provisions.
At the end of May, the banking system had accumulated 2.77 billion euros in provisions, over three times more than a year ago. Past due and doubtful loans reached 1.67 billion euros.
Mircea Ursache, AVAS chairman, said recently that the institution he is running was ready to take over non-performing loans from banks, with the problem being that banks refuse to admit to the actual volume of problematic loans, and resort to restructuring of all kinds.
Dan Pascariu, chairman of the Board of Directors of UniCredit Tiriac Bank, rejects the idea, saying any such talk is pointless at the moment. "Non-performing loans primarily concern the parent banks, which are fully able to manage the matter, if necessary. There is no need for the AVAS to get involved," Pascariu says. He believes that anyway, it would be difficult to set the terms under which the AVAS would take over non-performing loans from private banks, and believes the state should, indeed, receive stakes in banks.
Mihai Tanasescu, Romania's representative with the IMF, says the AVAS taking over "toxic assets" would do more harm than good.
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