Groningen: I would have made very different decisions

Several bankers are criticizing the policy of the National Bank of Romania (BNR), accusing it of distorting the market by slowing responses to commercial banks regarding new credit regulations. So far, of the 18 banks which have submitted applications, only the products of Alpha Bank, a division of Alpha Bank Group, one of the leading banking and financial services groups in Greece, has been approved by BNR.

One of the main banking system players against BNR’s policy is Steven van Groningen, President of Raiffeisen Bank, the third largest lender in the system according to total assets, with a some nine percent market share.

Steven van Groningen said exclusively for Business Standard that if he had been in the place of BNR Governor, Mugur Isarescu, he would have made very different decisions. “I would have given up measures to limit loans and replaced these with a system for monitoring and assessing each bank. I would have allowed lenders to give loans according to their risk policy, and would have relied on a surveillance system capable of identifying possible risky behavior.”

He believes the market has already been distorted because BNR is acting paradoxically. If the Romanian banking system is a healthy one then there should be no distortion of the competition, and if there are banks lacking solidity, BNR should use other means to intervene and supervise these, Groningen feels.

As far as loan market evolution goes, van Groningen estimates we might witness a drop in interest margins, due to intense competition. “Banks may accept a lower interest rate. An increase in loans is inevitable,” said the head of the Austrian bank. Raiffeisen Bank announced assets would increase by 6.6 percent in the first quarter of 2007, up to €4.8 billion.

The bank posts detailed bi-annual information regarding its activity. Last year, Raiffeisen Bank Romania reported €4.096 billion worth of total assets, surging 35 percent from 2005, without counting foreign loans. If the latter were added, the bank’s assets would stand at €4.64 billion in December 2006.  Raiffeisen Bank’s network includes over 290 units, about 860 ATMs, and more than 6,700 POSs.

Raiffeisen Romania currently has over 130,000 small and medium-sized companies for clients, approximately 5,000 large and medium-sized corporations, and more than 2.2 million individual clients. By the end of 2006, Raiffeisen had 144 units in