The cost of resources can cause problems for banks, margins are under heavier pressure amid strong competition and the impact will be seen in the price of loans, says Patrick Gelin, chairman of BRD-SocGen, the second biggest bank on the market in terms of assets.
"It's certain that liquidity in RON is somewhat more difficult to secure than several months ago, but we saw a similar phenomenon in the same period of 2006. The problem is that foreign financing has become more difficult, but I don't believe large banks will be harmed by this context, maybe just small ones," comments Gelin on the current conditions of the financial market.
He states the foreign market is now "closed" to possible bond issues, including RON-denominated ones.
"External financing solutions are very costly these days".
BRD's top man stated the bank had the support of the headquarters in Paris, but the group's policy is for each subsidiary to secure financing by themselves.
As a matter of fact, BRD did not join the group of banks that successively raised the interests granted to customers for RON deposits to secure additional resources in RON, with the only increase being operated in the case of Atucont savings account. "We have no liquidity problems in RON. We haven't operated any substantial increases for loans, either, we're still watching market movements," says Gelin.
Under the circumstances, he maintains BRD has not had any risk cost problems, maintaining the weight of non-performing loans under control.
Instead, BRD embraced the behaviour of many players on the market "exporting" foreign currency loans to avoid the cost of the minimum compulsory reserves.
As regards international market trends, Gelin considers there are signs of improvement, but the situation could be clearer after major banks have published their first quarter figures. "Romania has been affected so far only in terms of foreign financing, which is more difficult to secure. As a matter of fact, I believe markets' reaction to potential risks related to Romania is a little irrational, exaggerated".
Gelin believes things could become more complicated for Romania, too, if foreign investors start taking downcast analyses for granted and become more cautious.
He does not believe one can speak of a visible slowdown of economic growth in Romania this year.
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