BNR allowed banks to consider a ratio of maximum 25 percent of the recoverable value of collaterals when computing provisions for loans with delays in payment. In the past, for loans affected by delays in excess of 90 days, lenders set provisions for the whole overdue amount and corresponding interest, without being able to subtract at least some of the collaterals of the loan considered to be loss.
Total arrears amounted to RON 3.8 billion (some €0.88 bln) at the end of January 2009, compared to RON 3.3 bln (€0.76 bln) in December 2008. At the same time, the share of arrears in total due amounts rose to 1.61 percent in January, compared to 1.47 percent in December 2008, according to data published by the central bank.
At the end of January, about one third of the total value of arrears, about RON 1.375 bln (€0.32 bln), were delays of over 90 days. Moreover, banks have off-balance sheet amounts worth a total of RON 1.23 bln (€0.28 bln).
“The new regulation, which allows banks to consider a ratio of 25 percent at most of the recoverable value of collaterals when setting provisions, is an extremely shy measure. In my opinion, the grace period should have been extended to 150 days, and the ratio raised to at least 50 percent,” financial advisor Bogdan Baltazar told Business Standard.
