Since The Beginning of The Year,OTP Bank Romania Has Helped 100 Customers Restructure Their Loans

Ana Săbiescu

"People started having problems with their loans when the leu depreciated and the inflation rate remained high, while at the same time their income started to decrease and they stopped receiving their bonuses," said Laszlo Diosi, President of OTP Bank Romania, in an interview to BURSA.. "Many people took loans based on long-term salary raise planning, but that did not happen. On the contrary, salaries even decreased in some cases," Diosi added.

Since the beginning of the year, the OTP subsidiary in Romania has helped approximately 100 customers restructure their loans so as to be able to afford the monthly payments. "Those who had problems paying in January and February have started paying their instalments, but, of course, we have prepared products to help them. We restructure their loans or even postpone payments for some time for people who are now unemployed," the president of OTP Bank Romania told BURSA.

In addition to the depreciation of the leu, companies are also facing a high level of the ROBOR, which has inflated the interest rate they pay on their loans to over 20%, putting substantial pressure on the business. Laszlo Diosi believes that the interest rates on the interbank market should decrease towards an ideal 7-8% for lei. Meanwhile, OTP Bank Romania will promote EUR-denominated loans until RON-denominated loans become more affordable. EUR-denominated loans are more accessible due to a much lower interest rate. The bank will only accept RON-denominated debt for credit cards and overdraft facilities, according to Laszlo Diosi. When the interest rate on RON-denominated loans decreases to a level close to forex interest rates, customers will be able to choose between forex and RON.

• Markets to resume growth this Autumn

Laszlo Diosi is confident that financial markets have started to stabilize and will resume growth in September - November. The expectation concerns both lending and the real-estate market. In his opinion, the Romanian economy has the best chances in the region.

• OTP Bank Romania to offer two new deposits

The 2009 objectives of OTP Bank Romania include a 10% increase in the loan portfolio and a 25% increase in the volume of deposits. A notable increase in the customer base is also planned. "OTP Bank will introduce this month two new savings products: structural deposits and deposits with an investment management plans. Additionally, we have recently introduced a special deposit for pensioners," the president of OTP Bank Romania told BURSA. The deposit dedicated to pensioners comes with a 0.5% interest rate premium for RON-denominated deposits and a 0.4% interest rate premium for forex-denominated deposits.

"Although we are not among the top three banks in terms of the interest rate on deposits, our portfolio has been increasing significantly since the beginning of the year. This proves that people have understood that a high interest rate comes with high risks, which they are not willing to take," Diosi added. He is confident that the interest rate offered on EUR-denominated deposits will decrease to less than 7% in the near future. Concurrently, interest rates on RON-denominated deposits are likely to decrease to 12% in the near future and then to roughly 10% in Autumn. As far as lending is concerned, the bank is planning to focus on improving the quality of lending products while maintaining a healthy liquidity level.

Each OTP Bank branch has the objective of securing 2-4 new business customers per week and 2 new individual customers per day. The bank is also planning to open a new branch in Covasna County by the end of the year.

"We resumed lending in May, especially for small- and medium-sized enterprises, as we believe that this is a particularly important sector for the economy," Diosi told BURSA. However, risks and the volume of overdue receivables from already disbursed loans have been increasing in the Romanian banking sector since the beginning of the year. "The evolution of the risks on the market is unfavourable, but it is not yet terrifying. Both people and businesses need to reconsider their position," he added.

OTP Bank Romania is part of OTP Group - Hungary, one of the leading financial groups and Central and Eastern Europe. Both the Group and the Romanian subsidiary are having talks with the European Bank for Reconstruction and Development for establishing a financing line for small- and medium-sized enterprises.