Loan Granting in Romania
In September 2014, the value of remaining credits of natural persons and legal entities in Romania went up, but the money people owe to the banks has decreased in the past year and so has the number of bad debtors.
România Internațional, 06.11.2014, 13:42
In Romania, the value of remaining credits over 20 thousand lei (45 hundred euros) rose this September by more than 300 million lei or 6.6 million euros in the case of legal entities as compared to August. According to the Central Bank’s Credit Risk Department, the amount covers more than 12% of the total loans granted by banks. The remaining credits in the case of natural persons increased in September to the level of 1.4 billion euros as compared to August, which is almost 7% of the total loans.
The population’s remaining credits have decreased by 9.62% in the past year. Over 85% of the total natural persons’ remaining loans had payments overdue for more than 90 days. At the same time, the number of people with overdue payments towards the banks has diminished by almost 5%, down to 229 thousand in September 2014. In another development, the Central Bank on Wednesday decided to cut the reference interest rate by 0.25%, down to 2.75% and to slash the minimum mandatory reserves applicable to hard currency liabilities from 16 to 14%. The Central Bank has kept minimum mandatory liabilities in national currency to 10%.
According to Romania’s Central Bank, the decisions are aimed at ensuring medium-term price stability, concurrently with the sustainable reinvigoration of lending in order to contribute to a balanced and long lasting economic growth. According to economic analyst Dragos Cabat, these measures will not give an impetus to lending and will not foster lower interest rates:
Dragos Cabat: ”There is a lot of money on the market and the banks offer small interest rates on deposits. So, commercial banks will see no point in reacting to this measure on cutting the monetary policy interest rate and consequently they will not reduce the interes rate, nor will they grant more loans now, at the end of the year. So, this cut in the monetary policy interest rate will not be felt, apart for a possible decrease in interest rates on deposits.”
However, a recent analysis on a specialized site shows that exhaustion of funds in the First Home programme, the infusion of liquidities on the monetary market and diminishing interest rates for national currency loans have boosted demand on real estate market and triggered a price hike of up to 3%, particularly in capital city Bucharest. Experts believe that after a long time of stagnation, during which the construction of new luxury buildings in Bucharest was frozen, the developers’ appetite has been whetted again for this market segment, which the Capital magazine puts at 80 million euros. Real estate experts believe there is a big demand for land in top locations around Bucharest.
According to the same sources, the owners’ latest tendency to rent out instead of selling, has been mkep at the same level, due to the slow pace of sales and the profit gained from renting, which allows them to recover their investment in 7 or 8 years.
