N. Cinteza, BNR Supervision Directorate: We Are Reviewing The Banks" Proposals

• Some of them have a logic, others are pointless

Nicolae Cinteza, Director of the Supervision Directorate of the National Bank of Romania (BNR), told BURSA that the proposals made by commercial banks with a view to reviving lending are being discussed, but not all of them are opportune. "We have been discussing the measures proposed by the banks for a longer time. Some of them have a logic, others will cause no effect. We have asked the banks for certain data, we are processing such data and we will see which measures are feasible and which are not," Cinteza said. BNR Governor Mugur Isarescu, Finance Minister Gheorghe Pogea and several bankers met on Monday to discuss ways to revive commercial lending. The bankers said they were favouring such meetings and appreciated being informed and consulted on such topics. However, they also stressed the importance of making actual decisions. One of the requests made by the banks refers to the provisions that must be created when payments from customers are more than 90 days overdue.

One of the proposals is that the calculation of the provisions should refer only to the overdue part of the loan, and not to the entire value of the loan committed by a customer. BNR Supervision Director Nicolae Cinteza believes that a diminution of provisions would lead to a lower degree of solvency, so the decision should be analyzed very carefully as it could create serious risks, despite the apparent effect of giving banks more liquidities.

BancPost President Mihai Bogza described the Monday meeting of the banks, the minister of Finance and the BNR governor as very positive. "It is encouraging to exchange opinion in such panel because we are increasing our chances to identify and solve problems faster," Bogza said. He appreciates the Finance Ministry"s announcement that they are making efforts to have public budget management units catch up with their overdue payments to private suppliers in a bid to improve the liquidity of private companies and therefore increase their capacity to pay back the loans they took from commercial banks and thus close the circle. "If this truly happens, we will be able to witness a lending revival in the near future. It will be a clear sign that the lending risk is diminishing," Bogza added.

Nicolae Tarcea, Deputy CEO of Banca Transilvania, believes that the proposals made by the Romanian Banking Associations to revive lending are good and could lead to very useful effects. However, he stressed the need for a customized approach: "We need to find customized solutions to the banks" problems. The 40 banks cannot possibly have similar principles, desires or business plans, but this is a good start. It is obvious that the problems of a foreign bank are not similar to the problems of a Romanian bank," Tarcea said.

Nicolaie Hoanta, CEO of Banca Comerciala Carpatica, believes that the meeting "has given the management of commercial banks a chance to become more familiar with the concerns that governmental officials have in relation to the management of the impact that foreign and domestic factors are creating on the Romanian economy." In his opinion, the debate has highlighted the opportunities that banks can create through closer cooperation with the ministries, the governmental agencies and, generally, with the public economic environment. Furthermore, "it became obvious that the two institutions (BNR and the FinMin) with a major role in the management of the Romanian economy during this crisis are determined to work very closely with each other and together with the commercial banks," Hoanta added.

Laurentiu Mitrache, CEO of Bank Leumi, explained that such meetings were welcome, but, in his opinion, the wishes of the banks had not been discussed too much during the debate on Monday. "A measure that could solve very many of the problems that the banks are now facing would be to define and calculate the minimum mandatory reserves based on the assets in the balance and not the liabilities," he said. Similar meetings between commercial banks and the National Bank did take place in the past, but now the Ministry of Finance has been involved too, Mitrache said.

In turn, Laszlo Diosi, President of OTP Bank, told BURSA there was nothing surprising about the Monday meeting. "No funds were allocated to the banking sector and no support was offered to the banks wishing to help the small- and medium-sized enterprises," Diosi said. In his opinion, the Government should subsidize the interest for RON-denominated loans issued to small- and medium-sized companies.

The commercial banks are saying that it should be possible to use governmental bonds as an alternative to liquidities, concurrently with a change in the way in which bonds and swap operations are evaluated at the end of each year. However, BNR does not believe it is a good idea to keep governmental bonds as liquidities as long as the Lombard credit was a valid option. The banks also propose a reorganization / rescheduling of the loans taken by defaulting customers. Another idea would be to increase the grace period between the moment of default and the moment of foreclosure from 90 days to 120 days or even 150 days.