RO central bank warns rents, dividends are more risky incomes post-pandemic

Romania's National Bank (BNR) officially advised local commercial banks to revise their scoring methodologies to capture the more risky nature of the revenues from rents and dividends in the post-pandemic period, Economica.net reported.

Accordingly, banks should revise the scoring for individual clients, BNR recommended.

One of the recommendations sent by the central bank to commercial banks shows that the current context of the Covid-19 pandemic will have a negative impact on some companies, resulting in lower financial results and, implicitly, lower dividends for their shareholders.

At the same time, BNR's letter shows that the pandemic will also hurt the real estate market, "as a result of the pressure to renegotiate the lease contracts and higher vacancy rate of the rented buildings."

In this context, the central bank recommends that commercial banks reconsider the categories of income considered eligible when calculating the indebtedness ratio and maximum lending.

Specifically, banks should reduce the coefficients taken into account when granting credit for applicants whose income comes from dividends or rents.

The percentages differ from bank to bank, but the current market average is around 80% of dividend or rent income taken into account when calculating the client's indebtedness.

An adjustment due to the pandemic's effects will mean that this percentage will drop to 60-70%, depending on each bank's decision.

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