NBR: The law now forces banks to cut interests of old loans, hurting their revenues

The current version of Emergency Ordinance 50 of June 11, regulating consumer loans, forces banks to reduce the cost of current variable-interest loans by applying the margin set in the contract to independent indices, Robor for RON or Euribor for euros, instead of the internal indicators set initially, which will seriously harm their revenues, says Nicolae Cinteza, head of NBR's Supervision Department.

Banks generate the largest part of revenues from interest rates levied for current loans, as sales of new loans are very weak.

"(...) Steps should have been taken to secure the transparency of contracts and I am not against the law applying to new loans. Applied to current loans, it is hurting all banks," Cinteza says.

Ordinance 50 translates into the national legislation a 2008 European Directive referring only to consumer loans. The Directive stipulates the new rules should apply only to loans granted after the moment of translation into local legislation.

However, the Government has chosen for modifications to also apply to ongoing contracts. Thus, banks have to modify all current loan contracts, around eight millions, by September 21.