Top risks in the banking system

“For numerous reasons, the credit repayment capabilities of both legal entities and individuals are constantly dropping. The companies have difficulties due to decreasing sales, inter-company debts, and higher credit margins,” the CEO of OTP Bank Romania, Laszlo Diosi, said. “Only companies with multiple profiles can survive, which are not fully dependent on large projects or state/municipal businesses, and are larger, so they can manage their costs,” he added.

According to Diosi, more programs supported or initiated by the government are needed to help small and medium-sized enterprises. On the other hand, individuals are “suffering from stagnating or decreasing salaries, lack of bonuses, increasing prices, and rising unemployment,” Diosi added.

The Chief-Economist of Raiffeisen Bank, Ionuţ Dumitru, said that the main challenge for banks is and will remain a significant increase in poor-performing loans, due to the global recession. “A greater aversion to risk has led to more difficult and expensive access to financing sources, especially from abroad. Given the high dependence of local banks on financing from abroad, the liquidity risk is important,” he said.

The head of Bancpost lender, Mihai Bogza, said that a major risk, beside that for loans, is the risk regarding reputation, with any major negative event in the economic environment potentially lowering confidence in the banking system, he said.

Analyst Laurian Lungu added that the banking system will be subjected to extra pressures if the opinion of investors regarding macroeconomic stability worsens.