Romanian Ctrl Bk To Assess Effects Of New Household Lending Rules In Jan

Attending the EU-Cofile seminar organized by Alpha Bank, the central bank and the Romanian Banks Association, Georgescu was reserved in commenting bankers’ criticism, but said that the private lending decrease in October was not the result of the new rules, which were approved by the central bank after the second half of the month.

Georgescu said that 90% of banks operated based on the old regulations in October, and the deceleration in lending was caused by the banks’ lack of liquidity and their reticence towards financing.

Romanian private lending contracted by 1.6% in real terms on a monthly basis in October, althought it rose 38.4% on the year, to 193.06 billion lei (EUR1=RON3.7933).

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Georgescu also said that a decision to further cut the minimum required reserves ratio will depend on how the banks will use the liquidity surplus from the previous rate cut to 18%, from 20% of the leu-denominated liabilities.

The president of Romanian Banks’ Association, Radu Gratian Ghetea, said last week that Romanian lenders will ask the central bank to amend the regulation regarding household lending, as the new rules have blocked mortgage lending. Ghetea said that after the new rules are applied, there are few clients that can qualify to take a loan.

According to the new regulation, the banks will calculate a debt degree for household lending based on revenues that do not exceed by more than 20% the ones declared to the Fiscal Authority in the previous year.

Also, the maximum monthly installment an individual can afford to pay back on a loan will not be changed until the loan matures, according to regulation.

For banks that don’t have their own lending norms, the debt degree will be lowered to 35% from 40% of the client’s income.