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March 2, 2021

Crisis affected the capital of confidence

Bankers complain that financial institutions were often presented as public enemies and, in these conditions, the banking system cannot be much above the economic environment.

The present crisis has severely eroded the capital of confidence between banks and their customers, but not only them, the deputy CEO of BRD-Groupe Societe Generale, Petre Bunescu said yesterday in a seminar on risk management, hosted by BNR, Mediafax reports. “In terms of crediting, I think we should rebuild confidence. Unfortunately, this 4-year crisis severely eroded the capital of confidence between banks and their customers. (…) The sad truth I notice is that, unfortunately, banks have often been described as public enemies which only want to cheat their customers, to get rich, and you can imagine that such an offensive against the mutual confidence capital between customers and banks makes it very difficult to really resume crediting relations,” Bunescu mentioned. According to the banker, the annual statistic figures for 2012 show that, in total, the crediting activity suffered a decline and the bad loan ratio exceeded 18 pc. “In these conditions, without any doubt, the banking system – no matter how strong we want to see it well – has no means to be much above the economic environment. Units, small and medium-sized companies, even large ones that still resist in the market experience enormous difficulties in this time of crisis,” the BRD official explained. Bunescu added that these costs affect the results of banks and recollected the negative record of the financial situation reported by the banking system last year, with losses that exceeded RON 2 bln, according to international standards of accounting, “thus based on the rules comparable to other countries.”

Value of SME guarantees, close to zero

Banks cannot take anymore the risk of crediting small and medium-sized enterprises if the collateral is worthless, because it represents, in most cases, stocks and claims, so they prefer to support companies that actually produce, the president of Raiffeisen Bank, Steven van Groningen explained. According to the same source, customers do not understand that there are two categories of companies in Romania: those that pay and those that don’t, and the latter category increases the costs paid by the former. “My question is who needs our support? I say that those who produce would need our support. As a matter of fact, we do precisely the opposite, we protect those who do not produce, who do not create value in the economy. Only 1 pc of companies leave insolvency through a reorganisation process,” van Groningen said. The president of Raiffeisen Bank considers that, if Romania wants long-term investors or economic growth, it must invest in activities that create value.



The Romanian banking system, more dedicated to the economy than the European one Florin Danescu, executive president of the Romanian Banking Association (ARB) affirmed that the Romanian banking system is seven times more dedicated to the economy than the European one.

“The Romanian banking system demonstrates its dedication for the Romanian economy by financing 91 pc of the financing granted to the Romanian economy with only 64 pc assets of the GDP. At European scale, EU-27, 70 pc or 75 pc of the total financing is financed with a GDP assets ratio of 360 pc. This Romanian ratio between the two figures would mean 9.4 compared to the European figure which would be 0.2. (…) As a consequence, an exit from the industry is out of question. However, one notices a loss of commercial substance in the industry by the appearance of substitutes that can be encompassed by the already European term of ‘shadow banking,’ the ARB official added. According to the same source, banks must orient their attention towards communication and explain the complexity of evaluating the demand for crediting and the importance of qualitative factors beyond figures, especially when they look at the future of a business. In his turn, Florin Georgescu, first deputy governor of the National Bank of Romania (BNR) explained that, in the activity of banks and other economic units, risks hold a central place in their concerns, of late. A correct adjustment of performance indicators to the risk assumed for each line of business or globally at bank level implies a complex integrated methodology of risk quantifying and, equally, to define it clearly, Georgescu added.

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