SYNTHESIS-Bankers continue to bet on loans in exotic currencies despite BNR's warnings

President of Volksbank, Gerald Schreiner, said last week loans in Swiss francs given by the bank he runs represented one third of the total loans portfolio of 2.21 billion euros in 2007. The percentage is estimated to remain close to one third this year too while the loans volume should hike to 3.4 billion euros, bank representatives said.

Loans in Swiss francs represented 36 percent of OTP Bank Romania's total loan portfolio of 642.9 million euros in 2007. However this year most analysts anticipate a decrease of the percentage of loans in Swiss francs in the total loan portfolio in Romania, yet their volume will most likely be higher, OTP representatives told NewsIn.

Raiffeisen Bank Romania also deems it is possible that the loans in Swiss francs will suffer a slight decline but it is not likely to affect their volume considering that demand for loans is continuously growing.

Loans in Swiss francs are also offered by Bancpost, Banca Romaneasca, Credit Europe Bank, Garanti Bank, Millennium Bank and Piraeus Bank.

Banca Romaneasca gave loans in Japanese yens too in the first months of 2007 saying the public had expressed interest in them; however they gave them up starting April 2007.

BNR is unhappy with the increase of loans in Swiss francs and is acting against it

Discontented with the high level of loans in foreign currencies over which the central bank's monetary policy measures have little power, BNR imposed at its last meeting higher provisioning for foreign currency-denominated loans.

Moreover, the BNR governor Mugur Isarescu said that loans in foreign currencies such as Swiss francs imply higher risks despite the lower interest rates.

“The Swiss franc is traditionally a refuge currency,” used by investors during insecure periods which makes the currency stronger, Isarescu explained adding the central bank could take measures. Isarescu did not give any further details.

President of the BRD SocGen, Patrick Gelin, resumed on Thursday the governor's idea that “it is insane for banks to give loans in Swiss francs in Romania and BRD does not include such loans in its portfolio because of the risks involved.”

Volksbank's president deems that loans in foreign currencies are not that risky because the interest rates have been quite stable over the past five years.
Analysts estimate that almost one quarter of the total loans given in 2007 used exotic currencies.
According to data from the central bank loans in lei stood at 45.7 percent (67.7 billion lei) of the total nongovernmental loans given by banks (148.18 billion lei.

Loans to population stood at 71.5 billion lei at the end of last year of which loans in lei represented 47 percent (33.57 billion lei) while loans in euro stood at 44.2 percent (31.6 billion lei) and the rest were given in other currencies.

Source: NewsIn