Banks in July set up provisions worth almost 764m RON (182meuros) to cover the potential losses generated by loan portfoliodeterioration, but the degree of coverage for loans overdue by morethan 60 days is still dwindling. In July, provisions set up bybanks covered 107% of doubtful and loss loans, from 118% in theprevious month and 117% in late 2008, according to NBR data. Atbook value, loans overdue by more than 60 days are worth double thevalue of provisions. The rising unemployment and uncertainty aboutthe exchange rate progression are making bankers prepare fortougher times. "We are likely to further see bad loans riseconsiderably, generating a bigger provisioning need (...),"believes Nicolaie Chidesciuc, chief economist with ING Bank.Provisions in July rose by 6.3% month-on-month, to 12.1bn RON(2.9bn euros), while doubtful and loss loans advanced by over7%.
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