Bank lending will take off only when the banks seek profit – and not necessarily in relation to their balance sheets being cleaned of bad loans – vice-governor of Romanian central bank, Bogdan Olteanu, said, quoted by Agerpres. The statement comes after the central bank initiated a four-step plan to encourage banks to take bad loans fully provisioned and with no recovery outlook out of their books. The move is expected to slash the country’s staggering 22.3% NPL ratio*by some 10pps, central bank expects.
Banks came under public criticism after the 2008/09 credit crunch on accusations, sporadically admitted by bank officials, that high loan interest rates are aimed at covering the cost of NPL – thus not reflecting the risk of future loans but rather of past loans.
Central bank official’s statement also comes at a time when the stock of bank loans picks up – maintaining however a negative annual performance. Furthermore, the stock of healthy [total minus bad] loans is shrinking even faster since the volume of bad loans keeps growing. As of end-march, the stock of loans edged down by 2.7% y/y, in euros -- while the stock of healthy loans shrank by 5.7% y/y. Healthy loans were only 70% of the total bank loans.
* as of end-March 2014
Romanian President Klaus Iohannis said on April 16 he is rejecting a request from the justice minister to dismiss the head of the National Anticorruption Directorate (DNA), Laura Codruta Kovesi. ... more
International steel and mining company ArcelorMittal said on April 13 it has proposed a divestment package to the European Commission in a bid to obtain approval for its planned acquisition of ... more