Bankers granted three times fewer loans for agriculture than real estate
The increase in the number of failed real estate projects
financed by banks, both on the residential and on the retail
segment is raising doubts about how bankers calibrated their loan
portfolios, as long as real estate accounts for up to 10% in their
balance sheets and a field with guaranteed sales such as
agriculture for merely 3%.
At the end of the first quarter of 2010, the volume of loans
granted to the agricultural sector reached 6.8 billion RON (1.65
billion euros), the same as at the end of 2008, NBR data
reveal.
Banks have long neglected agriculture and only after farmers gained
access to structural funds did they start to finance their
projects. As a result, the volume of loans granted to this sector
started to increase as late as the last three or four years,
doubling from 2006 through the end of last year.
At the same time, loans granted to the constructions sector almost
tripled, to 9% of the total loans. The volume of loans to this
sector reached 22 billion RON (5.4 billion euros) in March, having
maintained relatively constant over the past year, considering last
year's recession dealt it a heavy blow.
Over the past year, almost 15 big residential and shopping projects
have failed in various stages of completion or their developers
went insolvent, causing banks to set aside very expensive
provisions.