Gelin’s prophecies, at the end of his BRD-SocGen mandate: Consolidation is next, only 5-6 universal banks will survive

Gelin said that, in the medium-run, once economies have emerged from the crisis, the local banking system will be subject to a consolidation stage, leaving only five-six universal banks and a few niche lenders on the market in the end. “I believe there are too many banks in Romania for the size of this market. There are banks for sale today, which no one is buying. This is a bad time for consolidation, because there are no buyers, and prices are down. I believe that in Romania, like in other European countries, there will be a stage of consolidation, rather significant, which will probably begin in 2011,” said Gelin.

For next year, the Chairman of BRD-SocGen said that loan demand will remain low, as the population is too heavily indebted. “Too many consumer loans were granted between 2004 and 2008. The Romanian banking system will have to digest the effects of these loans, part of which are nonperforming,” Gelin added. The official indicated that the largest part of nonperforming loans registered by local lenders belongs to individuals and small and medium-sized enterprises (SME).

“I do not see lending bouncing back for these categories of clients in 2010. Regarding the large SMEs, which are still performing and able to function, it all depends on the relaunch of the economy next year,” Gelin estimated. As far as large companies are concerned, he said that many of them have postponed investments scheduled for 2009. The same economic relaunch could unblock investments, but this could also happen in 2011. “However, in 2010 we will see rather high demand from the public sector,” Gelin indicated. BRD-SocGen’s Chairman added that, the year 2010 will unfortunately not bring investments related to European funds. “It will take a while until the future government settles in, until some priorities are defined and identified, until projects are validated, and this will take a lot of time. And the effects will probably begin to show towards the end of 2010, and in 2011,” said the head of Société Générale’s local subsidiary.