Half of the banks could post losses in 2009

 „I estimate at least a doubling in loans considered to be losses or subject to poor performance. If they have something to foreclose, they will find themselves with tons of homes and cars they are unable to sell. The most likely scenario is that Romania’s economic situation will worsen or remain unchanged, and redrafting payment schedules will only put make-up on the balance sheets of banks. More than half of the Romanian banks will end 2009 in the red,“ said Dragos Cabat, President of Chartered Financial Analyst (CFA) Romania. However, this situation would be in line, albeit on a much smaller scale, with that of international lenders, who registered substantial profit cuts in 2008 or even thousands of billions of euro worth of losses, although no Romanian bank has toxic assets in its portfolio.

„Some banks may post losses, but as long as the solvency indicator remains high, there is no problem,“ the Head of the Supervisory Office of the National Bank of Romania (BNR), Nicolae Cinteza, told Business Standard. The solvency indicator was 12.34 percent in 2008. The depreciation of the leu and higher interest rates forced lenders to set provisions worth almost €1 billion in 2008 alone, as the quality of their loan portfolios deteriorated sharply. „Foreclosures are not a solution. Banks must focus on finding solutions. We expect our clients not to be late in paying their installments,“ said Radu Gratian Ghetea, President of the Romanian Banking Association. (G.F.)