Banks' objections to loan repayment moratorium in RO were ignored

The amendments proposed by the Romanian banks to the Government's plan about the 9-month bank loan moratorium were entirely ignored, according to Profit.ro based on documents from the Romanian Banks' Association (ARB).

The Government ordinance providing for a moratorium that both legal and natural persons with financial issues may apply to was already endorsed last week.

In fact, ARB has argued firmly against a new moratorium, as long as the European Commission did not include such a solution as part of the framework for the management of the crisis but rather suggested individual solutions designed by banks for their customers.

But if enforced, the amendments should tackle several issues, the bankers argued. If 15% of borrowers take advantage of the moratorium, as it was the case with the previous moratorium after the Covid-19 lockdown, the banks would not face liquidity issues, but the currency and maturity mismatches may increase, the National Bank of Romania (BNR) commented to Government's moratorium draft.

An additional problem for banks comes from the fact that, unlike last time in 2020, there is no waiver for the provisions to be set aside for the loans subject to the moratorium.

"The impact of the new moratoriums on the indicators of asset quality and solvency of credit institutions will be significantly influenced by the accounting treatment that will be applied to loans that benefit from new moratoriums," BNR said.

The debtors that relied on the past moratorium are those with the highest risk, data quoted by BNR indicate.

The companies that resorted to moratoriums generated a non-performing loans rate of 14%, compared to 4.2% in the case of those that did not use such facilities, according to NBR data.

In the case of the population, the rate of non-performing loans for those who applied for the suspension of rates is 9%, compared to 3% for those who did not apply for the facility.

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