Banks forced to divide their clients into winners and losers

“Lenders are trying to find solutions for those who request the rescheduling of their loans. There are also desperate situations, in which rescheduling will probably not be possible. Unfortunately, banks are forced to play God, choosing the winners and losers,” Pascariu said.

Lack of confidence in the financial system

Regarding the collaterals behind the loans, the official said that caution, even before the crisis, determined banks not to grant loans without a down payment of a minimum 25 percent in the case of mortgages. This means that the value of the loan is below that of the mortgage plus down payment, so, for now, lenders are not in the red in this respect. The great problem of lenders worldwide, following the collapse of Lehman Brothers, was the lack of confidence in the financial system.

On the other hand, although the fear of a liquidity crisis is part of the general essence of banking, according to Pascariu, the current situation has determined parent banks to stop financing their subsidiaries worldwide, with these now forced to fend for themselves.

“For every 100 units of deposits attracted in Romania, the banking system gave 130 units in the form of loans. This means that 30 were brought from elsewhere. But these 30 units actually represented the savings of Dutchmen, Austrians, Italians, and the French. And this money has suddenly become more expensive, because mother-banks had difficulties attracting loans,” Pascariu explained.

The other fear of lenders is related to the quality of their loan portfolios, which is tested especially in times of crisis. “When a bank grants a loan and does the risk analysis, it is considering a great deal of variables. Let us not forget that in the past 20 years, we were only growing. And nobody foresaw that we would end up in such a situation. Reality proved us wrong, which is good in a way, because it made people, risk analysts, sellers of loans to become much more careful than before,” the official added.

According to Pascariu, the local banking system will not experience a period of growth in lending as sharp as the one until 2008 very soon.

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