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June 26, 2022

BNR asks banks to make efforts to avoid lawsuits

The representatives of the National Bank of Romania (BNR) asked the banks to make all efforts to avoid lawsuits, as they inflict a reputational risk, said Alexandru Paunescu, chief of Legal Department within BNR. “Obviously, this is impossible… One can only check the media to realize how much limelight is brought on these lawsuits, how affected is the image of banks and their reputation,” said Paunescu during the conference “Legal colloquia of the National Bank of Romania, Mediafax reports.”
He said the reputational risk occurs when the lawsuit starts and its conclusion either in favour or against the bank leads to a lower or higher reputational risk. “A credit institution should be extremely robust, but in the same time equally reckless if they decided not to establish an independent recognition of the legal risk management,” said the central bank official.
Remuneration of bank managers set after checking financial intermediation cycle
The remuneration of credit institutions managers will be made depending on the results of checking the entire cycle of financial intermediaries and following the implementation of intricate instruments in the banks, according to European requirements, said BRN vice-governor Bogdan Olteanu. He said the regulation of “important persons” ‘remuneration started from a “very cold” analysis of the fact that in the major financial systems prior to crises there was an incongruity between the targets of financial intermediation system on the one hand and the bankers’ payments, on the other hand. He pointed out that the entire prudential regulation framework was approved very late and came into force very fast, and the banking system, the regulators and the supervisors had to enforce it rapidly, this year being past the deadline already.
The new prudential standards in Basle were adopted in Europe by directives and regulations, which were in their turn transferred into the Romanian law, as the bankers adopted these provisions this year.

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