Nearly 15% of pre-crisis banks loans in Romania were deferred

Some 14.7% of loans that Romanian banks had on their balance sheets at the beginning of the crisis in March - RON 41.8 billion (EUR 8.8 bln) - are subject to the repayment moratorium that expires at the end of the year, Romania's National Bank (BNR) deputy governor Leonardo Badea disclosed.

Some 564,000 natural and legal persons have used this facility offered by the Government in agreement with BNR to support debtors whose revenues were impacted by the COVID-19 crisis.

The Government reportedly negotiates with the banks prolonging the moratorium, but the BNR is reportedly not involved in the talks, Economica.netreported.

The recent recommendations issued by the European Banking Association (EBA) indicate a maximum of nine months for the total length of the moratorium - meaning that Romanian debtors who applied in April-May may get another couple of months at most. Furthermore, the change in Government may leave the talks on this topic in limbo.

"The impact on the banking sector can be significant if, after the expiration of the moratorium, the financial position of borrowers who have resorted to this facility will not allow them to resume paying their installments," Badea said in a conference, quoted by Ziarul Financiar.

Under the deal, debtors are supposed to start paying the accrued interest during the moratorium period immediately after it expires, in installments. This predictably puts additional pressure on their resources.

Outgoing finance minister Florin Citu announced that the Government has been discussing with BNR and the banks about prolonging the moratorium, but he stressed that such a measure must also be cleared by the European authorities (European Banking Association).

Romanian banks were not compelled to set aside provisions for the loans deferred under the moratorium, and only some of them decided to take such precautionary measures.