There is credit demand on the Romanian banking market, however not all clients meet the eligibility criteria when asking for a loan, Radu Gratian Ghetea, President of the Romanian Banking Association (ARB).“Banks are not looking on clients with suspicion; on the contrary, they want to offer credits. But in order to offer credits there has to be an eligible demand. We also have to take into account the fact that at a time when the global economy is still in crisis risk is evaluated differently. Currently there is liquidity in the system but each bank has its own market strategy and decisions concerning placements have to be rigorously analyzed considering the level of bad credits. The creation of provisions on both the corporate and retail segments, generated by the worsening quality of credit portfolios against the backdrop of deteriorating economic conditions, has maintained pressure on the net results reported by credit institutions, so that losses were registered at the banking system’s level in 2010 and 2011,” Ghetea said.The ARB President pointed out that commercial banks are far more exact in regard to the cost of operations, against the backdrop of a persistent crisis and of the growth in the volume of bad credits. “The years of crisis were characterized by a drastic reduction of consumption that led to the moderation of the crediting activity. Credit institutions have adapted their strategy, their territorial expansion plans, and their product portfolios and have switched to a more careful control of operational costs. In the scenario that features persistent crisis effects we may next witness the continued growth of bad credits and the banks will be forced to create new provisions, which will erode the credit institutions’ profits. The issue of strengthening the capital base will probably be raised in some situations but I expect it not to pose any problems,” Radu Gratian Ghetea underlined.On the other hand, he explained that the powerful credit expansion seen prior to 2008 took place against the backdrop of economic boom in Romania. “The growth of crediting in the period of Romania’s economic boom was mainly due to positive perceptions of the economy and on the evolution of Romanian salaries considering that Romania has been an EU member state since 2007 and the normal tendency was to hike incomes in order for them to gradually reach the European average. The crisis has thwarted those plans and most juridical and physical persons have had to resize their projects. The crisis has led to a series of talks concerning regulation and deregulation. Credit institutions in Romania operated on the basis of existing regulations at the time, including in what concerns credits offered merely on the basis of the clients’ IDs. If you have a regulation that forbids a certain action you cannot do the opposite because you risk losing maybe even your banking license,” the ARB President stated.