Păunescu: "Some banks still lack a strong appetite for negotiating credit contracts"

Some commercial banks still lack a strong appetite for negotiating credit contracts, said Alexandru Păunescu, the representative of the National Bank of Romania in the Steering Committee of the Alternative Dispute Resolution Center in the Banking Sector (CSALB). There is room for improvement in increasing the number of cases filed with CSALB for negotiation between banks and consumers, he added, during a press conference.

Alexandru Păunescu mentioned that he is scheduled to meet with representatives of these credit institutions to identify the reason why they are not very open to negotiating with clients: "The banking market is undergoing a very important transformation, we are talking about three mergers this year, so we are not going through an extremely prosperous period. We are going to have a discussion with some major banks, where things can be improved. At this moment, we have a very good relationship with BCR, with BRD Groupe Societe Generale, we have a good relationship with Raiffeisen Bank, with Banca Transilvania, and we don't have much connection with the other banks. In any case, if a few years ago we encountered a great deal of reluctance from some banks that practically refused all negotiation requests, now there are no more banks that refuse to enter into an alternative dispute resolution procedure."

According to Mr. Păunescu, generally, the number of requests for alternative resolution is directly proportional to the retail market share of the banks to which those requests are addressed. In his opinion, the number of cases currently open at CSALB should be higher by about 150. The representative of the Center does not see a skyrocketing increase in the number of cases but rather a progressive, organic evolution. Alexandru Păunescu believes that solutions need to be identified so that consumer loans do not turn into non-performing loans: "It's not an alarm signal, but there is a need to improve the alternative dispute resolution activity in banking."

Among other things, Mr. Păunescu mentioned, in response to a question, that there is a possibility that the additional 2% tax applied to the turnover of banks could be reflected in the final costs borne by consumers. He specified: "Any costs imposed on banks can turn into costs for customers (both consumers and legal entities). However, it is a business calculation to see how much of these costs will be reflected in the prices of banking products. So far, we have only seen opinions from banks, not concrete measures from them, so commercial banks are in the best position to say how they will proceed. In any case, the market itself will have a downward trajectory in terms of costs as inflation decreases. The NBR will reduce the monetary policy interest rate as inflation falls, and all these movements will have an impact on the evolution of ROBOR and IRCC."

• In 2023, CSALB received the most consumer requests in the last seven years

Last year, CSALB received the most consumer requests in the last seven years, and banks accepted 15% more negotiation requests than in 2022, as announced by representatives of the Center. The value of benefits obtained by consumers following negotiations with banks exceeded euro3.3 million in 2023.

According to the cited source, CSALB received 2,932 requests in 2023 from consumers who requested banks (1,885 requests) and NBFI's (1,047 requests) to enter into negotiations within the Center. Since 2016, CSALB has received approximately 15,000 negotiation requests with credit institutions.

Last year, banks accepted 100 more requests from consumers than in 2022. Thus, 754 negotiation files were formed with banks and only four with NBFI's, according to CSALB representatives.

The majority of the credits referred to in consumers' negotiation requests with banks are in lei, namely 86.6% of the total. In this context, over the past six years, there has been a significant and constant decrease in requests referring to credits in euros (from 28% in 2019 to 9.1% in 2023), CHF (from 25% in 2019 to 3.8% in 2023), etc. Among the reasons behind this phenomenon may be the increase in interest rates on loans in lei, as well as the fact that people no longer accessed loans in other currencies.

Only eight out of 100 negotiations did not accept the solutions proposed by conciliators and did not reach an agreement, the sources said. CSALB conciliators had the highest percentage of conciliation efficiency since CSALB was established (92%).

Another 555 agreements between consumers and banks/NBFIs were amicably resolved through direct agreement after consumers sent their requests to CSALB. Most of these were simple issues that could be resolved without the involvement of a Center conciliator or were not negotiable conditions (such as requests for the deletion of records in the Credit Bureau), the sources said.

According to them, the average negotiation time with the bank was 24 days last year. "Although, according to the law (OG 38/2015), the maximum period for identifying a solution through conciliation is 90 days and may exceed this term in the case of more complicated negotiations, the speed of alternative dispute resolution in court has increased steadily in recent years," CSALB specialists emphasize, adding: "The fastest agreements were finalized in 2023 in one day (14 cases) or two days (37 cases). There were also 31 much more difficult negotiations that ended after more than 100 days.

The total value of benefits obtained by consumers following negotiations conducted between 2016 and 2023 within CSALB amounts to over euro11.3 million. The highest amount resulting from negotiations was recorded last year (euro3.3 million), over 60% higher than in 2022.

On average, a consumer obtained benefits of euro5,000 from a negotiation conducted last year. Furthermore, benefits of up to euro5,000 represent half of the agreements intermediated by CSALB. The sums represent reductions in the cost of credit, through the reduction or elimination of commissions, interest rate reductions, installment decreases, and even the cancellation of the entire debt (in difficult cases).

Over 500 lawsuits in Romanian courts have been amicably resolved in the last three years within CSALB. Banks and judges proposed alternative dispute resolution through conciliation to consumers from the first court hearing.

Thus, consumers reduced the time it took to solve their problem (from several years in court to an average of 30 days in recent years within CSALB) and benefited from the free conciliation for individuals, in exchange for the expenses involved in a lawsuit.

Alexandru Păunescu emphasized that people increasingly resort to alternative dispute resolution for misunderstandings they have with banks, this being a quick and cost-free option for them: "There are many cases where people have solved their problem with the bank in one or two days. Practically, after spending a few minutes filling out the application on the CSALB website, the consumer received a response from the bank the same day. This was followed by opening a conciliation file, in which the conciliator immediately proposed a solution. This was accepted by both parties, and the case was closed a few hours later, after exchanging emails and phone discussions. This openness and willingness shown by some commercial banks contribute to strengthening the confidence in the entire banking system.

Unfortunately, there are still banks that reject some of the requests they receive from their own clients through CSALB. In these circumstances, our reiterated recommendation, also for 2024, is for these credit institutions to avoid such cases ending up in court, trying to directly solve the consumer's problem. If the request cannot be resolved through direct negotiation between the parties, then it is preferable for it to be resolved through the involvement of CSALB conciliators, avoiding the contentious path. Thus, the parties in dispute would save time and money resources, and public courts would be relieved of lengthy and difficult processes, in which, in the end, only one of the two parties benefits, not both, as happens in conciliation."

Most of the requests received by CSALB concerned renegotiating contracts through credit conversion, finding a solution following negotiation, suspending payments (13.2%); amicably resolving disputes from court (13.1%); refunds of amounts (commissions, interest) (11.6%); solutions for problems caused by the increase in IRCC/ROBOR or the transition to a fixed interest rate (10.6%); rescheduling, rescheduling, refinancing a loan (7.4%).