Several branches of BCR, the largest bank on the market in terms of assets, have ceased to release collateral-free consumer loans to new customers in the wake of a "partially higher-than-expected" upsurge in overdue payments and fraud, said Bernhard Spalt, vice president of Erste Ban and chief risk officer.
"In some branches, we no longer grant collateral-free consumer loans to new customers, but only to people with a solid credit history with BCR. We've also tightened scoring grids for these products in order to curb the upward trend of overdue payments. We have to monitor the distribution network and identify the factors feeding the negative trend," Spalt told ZF.
The chief risk officer of Erste, the main shareholder of BCR, stated that one of the factors was related to fraud, manifested both at the level of customers and employees of the bank.
"The bank also needs strengthening, because there have been cases when internal procedures were not correctly applied. At the same time, we have situations where customers overestimated their income outlooks (...)".
At BCR, Erste implemented certain special procedures in relation to persons with overdue payments, along periods of delay of 5, 10 and 15 days, in a bid to bring payments by instalments back to normal. Spalt also explained that BCR is working with debt retrieval companies, but believes the bank is able to solve the problems by itself.
The NBR governor has recently issued a warning on incidences of fraud in the banking system, particularly in relation to forged documents.
Spalt explained that the upward trend registered in relation to payment delays for consumer loans released by BCR has become visible over the past year and a half, with the evolution being "partially higher-than-expected".
However, the share of non-performing loans revolves around 2%, compared with an average of 2.4% at the level of Erste group. At the same time, Spalt highlights the positive evolution of the bank's mortgage loan portfolio, where customers are much more disciplined. However, he believes problems could also emerge in relation to this portfolio and provided as an example the Czech subsidiary, Ceska Sporitelna.
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