Florin Georgescu: Switching to the IFRS will not result in unhealthy lending

• The NBR will introduce prudential filters

Switching to the International Financial Reporting Standards (IFRS), in 2012, will not result in unhealthy lending, but the Romanian National Bank (BNR) has established prudential filters that would prevent the artificial increase of banks' solvency ratios, Florin Georgescu, prime deputy-governor of the NBR said yesterday, at the EU-COFILE seminar hosted in Sinaia by the NBR, the Romanian Banking Association and Alpha Bank.

He said: "Switching the accounting standard from the RAS to the IFRS will not create the foundation for an unhealthy expansion of lending, because, through the norms of the NBR, established in agreement with the banking community, certain prudential filters have been implemented, which would prevent the artificial increase of the solvency ratio of the banks, which would allow an unsustainable recovery of lending. Essentially, from a prudential point of view and IFRS provisions will be calculated based on these prudential filters."

The prime deputy governor of the NBR has decided that switching over to the IFRS will lead to an improvement of the banking parameters used for bank reporting, which will improve the image of the group that a bank belongs to. The new norms will improve the stock prices of parent banks, only from an economic and social point of view.

"The main goal of prudential filters is to increase the solidity of each bank, at the current stage, and of the overall banking system, by avoiding the unsustainable development of lending, without any additional capital base that would justify it", said Florin Georgescu.

Starting with January 1st, 2012, Romanian banks will report their financial results according to the International Financial Reporting Standards (IFRS), whereas the bookkeeping based on the Romanian Accounting Standards (RAS) will be eliminated.