Romania's foreign debt triggered by population over borrowing, not banks, says BNR Governor

Romanian central bank governor Mugur Isarescu Wednesday defended local creditors, saying the lenders only attracted external financing to respond to consumer over borrowing. "The banks acted as intermediaries, and we could say they lured the clients in (…), but they weren't the ones that borrowed money and plunged Romania into debt: the citizens were the ones who took loans," Isarescu told a banking forum. Isarescu said the bulk of the EUR 22 billion foreign financing attracted by the commercial lenders was addressed to local loans. "Romanian banks have foreign assets of EUR 2 billion, while their domestic assets reach EUR 50 billion. In other words, the banks did their job on the local market (…). Therefore, the banks in Romania are only to be blamed, to use a strong word, for EUR 22 billion out of a EUR 90 billion external debt," he added. Around 4.5 million Romanians borrowed money from banks over the past years, equal to half of the country's workforce, Isarescu said. Only about EUR19 billion of Romania's external debt represents public debt, he said, mentioning that the level was "manageable." Mediafax