The capital injections made by the shareholders of some banks from 2009 to 2014 totaled 1.8 billion euros to cover the losses generated by the ‘exuberance’ in loan lending in the period before the downturn, but now there is optimism regarding the resumption of lending healthier bases, with more wisdom, says First Deputy Governor of Romania’s Central Bank (BNR), Florin Georgescu.
‘The capitalization of banks, measured through the solvency indicator, is on the rise from 14 percent – 15 percent to over 17 percent, because from 2009 to 2014 the shareholders of some banks made gradual capital injections that totaled 1.8 billion euros, without taking into account the second tier capital, which came from subordinated loans, longer than five years, where we also have half billion euros,’ said BNR First Deputy Governor Florin Georgescu.
He said that capital injections were needed after the ‘movement freedom’ and ‘exuberance’ shown by banks before the downturn.
In his opinion, the move to re-regulation produces additional costs to banks, which are already affected by the risks assumed in a manner not quite prudent during the exuberance period.
‘The conclusion is that we are in a period of correcting excesses, we are in a period of norming up to where it is considered necessary by the banking policy-makers in Europe and the rest of the world. This is the base of a healthy relaunching of the basic activity of banks, namely lending,’ underscored the BNR official.
According to Georgescu, there is optimism for the resumption of lending activity on healthier and wiser bases.