Bankers kept private lending "frozen" last year and, in theabsence of funding, the Romanian economy ended up being the onlycountry in negative territory apart from Greece, more than twoyears after the 2008 financial crisis.
Private sector lending fell by 3% in real terms last year(eliminating the impact of inflation), similarly to what happenedin 2009. The scenario of the past two years is radically differentfrom the up to 50% growth rates recorded in the booming years ofthe economy. At the end of last year the volume of private lendingwas 49 billion euros, compared with nearly 50 billion euros inDecember 2008.
In the absence of money for new acquisitions, domestic consumptioncollapsed and exporters did not manage to drag the rest of theeconomy along, despite the return of demand on foreign markets.Despite exports climbing 30%, the economy fell by nearly 2% lastyear, according to estimates.
The bankers have yet to notice a rebound of consumer lending. Theywould rather finance companies, but here investment projects arelacking, because entrepreneurs do not see demand on the horizon.How can one break this vicious circle?
"I hope the infrastructure projects will be launched and startabsorbing increasingly more money," says Lucian Anghel, chiefeconomist of the BCR, the biggest bank on the Romanian market byassets. Similarly to last year, he sees prospects of lending growthon the corporate segment. Indeed, in 2010 companies were able toabsorb more money from banks, but their demand focused on foreigncurrency-denominated loans, which continue to be much cheaper. Onthe retail segment, demand was similar, being only tentativelysupported by the "First Home" scheme for mortgage loans.
Bankers only found demand for foreign currency-denominated loanslast year, with the high interests keeping customers away fromborrowing in RON.
The volume of foreign-currency loans granted to individuals and tocompanies climbed by 9.8% last year, to nearly 132 billion RON (31billion euros), managing to raise the overall volume of privatefunding to 209.3 billion RON, 4.7% more than at the end of 2009.However, eliminating the impact of inflation, private lending fellby 3% in real terms.
Companies attracted the bulk of financing granted by banks lastyear, with the volume of loans up by 7.4 billion RON (theequivalent of 1.75 billion euros), and demand being mainly forforeign-currency loans. Companies had loans worth 65.8 billion RON(15.4 billion euros) in December 2010, 11.9% more than in thesimilar period of the previous year.
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