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January 27, 2023

ARB President: 2014 will be a year with a significant loss in the banking system

The Romanian banking system will finish 2014 with a significant loss, bearing in mind the process of clearing the bad credits from balance sheets, a process that should have been finalized at the end of September but that is still ongoing, Radu Ghetea, President of the Romanian Banking Association (ARB), stated on Thursday at an economic conference.
“In my opinion 2014 will be a year with a significant loss (in the banking system – editor’s note). In 2013 the banking system was on a slight upward trend, but it had registered losses during the three previous years. Already, after eight months, the National Bank of Romania has announced a loss at system level, and the process of cleaning the balance sheets had not even started very well. I said it before and I repeat: the bill of the crisis is being paid by the banking system in most part, because all these provisions we have to make for bad credits means just as much money we did not recover from clients that went bankrupt, money we will probably never recover at the initial value because in the meantime the clients will either not be able to move at all or the guarantees we have will no longer have the value they had,” Ghetea explained.
In what concerns the process of externalizing bad credits, the ARB President claims that it is ongoing but considering its complexity it has not been completed on time.
“The actions of cleaning the balance sheets have been taken, the desire being to finalize them sometime in September, at least this was the National Bank’s request. In my opinion they haven’t been finished. We said that things are not quite very simple. BNR has understood and has said that those who cannot make it by September 30 should come up and explain why that is the case,” Radu Ghetea explained.
Referring to the evolution of bad credits by the end of this year, the ARB President stated that BNR and the whole system want the percentage of bad credits to eventually be comparable to the average percentage in the European Union.

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