Adrian Vasilescu, BNR:  Lending Will Not Relax In Romania

Ana Săbiescu

Adrian Vasilescu, advisor to the Governor of the National Bank of Romania (BNR), explained late last week that the loan from the International Monetary Fund (IMF) (i.e. 12.95 billion EUR) would not lead to lending relaxation in Romania. Vasilescu told a television programme that "we are not headed for any kind of relaxation, nor is the National Bank of Romania preparing any lending relaxation." His remarks came after a decision of the BNR to reduce the key rate by half a percentage point to 9.5% p.a..

Economists believe that the decision to cut the key rate will lead to an immediate reduction of the interest rates on the interbank market and a somewhat belated reduction of the cost of lending. "The economy is still in the cold season. We hope to see banks issue more loans in the summer," Vasilescu added.

However, banks will have some difficulties lowering the interest rates on loans as they are currently paying fabulous rates on deposits. In an ardent drive to secure as liquidities as possible, banks currently offer as much as 17%, prompting some financial analysts to give warnings. Adrian Vasilescu reiterated assurance that the Romanian banking system was quite healthy, partially thanks to the National Bank"s effort to prevent toxic products from entering the local market. "As long as banks don"t start falling, we are safe," he said, emphasizing that the effects of the global crisis on Romania were not as bad as on other countries.

BNR Governor Mugur Isarescu also repeatedly assured that the Romanian banking system was solid, exemplifying with the high solvency rate of the member banks. The average solvency rate of commercial banks operating in Romania was over 12% at the end of last year, well above the minimum regulated threshold of 8%.

Isarescu also explained that the commercial banks" potential decisions to increase share capital in the near future would not be a sign a weakness or a consequence of the stress tests applied on their lending capabilities.