ON THE ISSUE OF LOANS DENOMINATED IN SWISS FRANCS BRD CEO disagrees with the Banking Professional Association

It is part of the decency of the banking profession to inform your customers about the currency risk when granting loans, said Philippe Lhotte, chairman and CEO of BRD, in a statement of position concerning the row of loans denominated in Swiss francs.

"I am not sure that the 75,000 customers (ed. note: who have passed loans denominated in Swiss francs) were warned about that risk", he said.

Philippe Lhotte considers that NBR Governor Mugur Isărescu is right when he says that the negotiations must take place between the customer and the bank, but so is prime-minister Victor Ponta who thinks that each party must take responsibility: "If the banks bear part of the blame, they need to take it. I am not sure that the banks have informed their customers adequately about the risks of these currencies".

BRD only has five CHF loans in its portfolio and it is going to propose to its customers their conversion to lei, at the exchange rate valid prior to January 15th, said Philippe Lhotte.

Statements made by bank CEOs are usually extremely diplomatic, as they prefer to make dull statements, to avoid offending someone or to express their complaints in a veiled manner, making them readable between the lines.

The CEO of BRD yesterday dropped this banking practice. After he outright said that banks must take responsibility for the situation of CHF-denominated loans, Lhotte wasn't shy about criticizing his colleagues of the Council of Banking Professional Associations in Romania.

He mentioned that he had not agreed with position expressed by the Council of Romanian Banking Professional Associations (CPBR), in a press release published at the end of January, concerning the solutions that banks proposed to customers, and he refused to validate it.

"Under these circumstances (ed. note: where the CPBR sent a press release that BRD did not validate), I am not sure that BRD will continue to be a member of this professional association".

The members of the CPBR are Banca Comercială Română, BRD - Groupe Societe Generale, Raiffeisen Bank, UniCredit Ţiriac Bank, ING Bank Romania and Volksbank Romania.

The CPBR considers that the conversion of loans to a different currency must comply with a EU directive which will become applicable starting in 2016, which stipulates that the conversion must be done at the exchange rate valid on the day thereof.

Bogdan Preda, Executive Director of Public and Institutional Relations of the CPBR, declined to comment the statements of BRD's CEO.

According to Lhotte, the issue of the conversion of loans - which must be doable freely - should not be lumped in with the situation of loans denominated in Swiss Francs.

He also said: "There are few Romanians that have revenues in CHF, few companies with flows to Switzerland. Granting loans denominated in CHF was not really justified. Since the interest rate for loans denominated in CHF was lower than it was for lei, some people opted to borrow in CHF. The important thing was for the bank to inform them about the risk".

The BRD CEO considers that a law on the insolvency of individuals is necessary in Romania, but it needs to answer the needs of all the citizens, and not serve just as a pretense for debtors, who sometimes act in bad-faith and don't want to repay their loans.

"We need to study other countries' experience, to see what was good and what was bad, and to pass this draft law with extreme care", Mr. Lhotte said, adding that, last autumn he was worried, because he thought the law would be passed in a hurry.