Moreover, because banks did not restructure as thoroughly as they should have considering the crisis, they have become inefficient and passed on this cost to the good paying customers, thus making the crisis even worse.
To help the market, BNR will relax the lending regulations and hopes bankers will pass on the relaxation to their customers. “Rigid restructuring is not recommended as far as I am concerned. The bank’s policy has to encourage collecting loans. We don’t want banks turning into real estate agencies,” the head of the Supervisory Department of BNR said during a seminar organized by BNR, the Romanian Banking Association and Alpha Bank in Sinaia.
The restructuring of the banking system that began in 2008 was not as thorough as the BNR would have expected and the central bank had to ask two banks to close their offices in the country that were generating significant losses, Cinteza says.
The administrative expenses of the banks from employee salaries to rents for their offices can be found in the loan interests. The latest data reveal a trend among the banks to raise interests again after four months of decline. Cinteza explained that the restructuring was quite thorough at those banks where the BNR expressly required it. “We requested two banks to close those offices that were generating significant losses.”
To be able to cope with rising costs and dwindling revenue during the crisis, any banking system has to restructure. As banks have adjusted their networks to a lesser extent than their business with the customers, one can talk about a certain inefficiency. This is why the cost of loans did not go down, but instead went up.
Bankers have frequently talked about up the efforts they made to curb costs, yet three years from the start of the crisis their office networks and number of employees are only slightly down from the peaks of 2008, while monthly loan sales are sluggish.
The banking industry infrastructure was at its height in 2008, when territorial networks reached a record 6,552 branches and offices, employing more than 71,600 people. In September, the number of branches was down merely 7% to 6,071 and the number of employees was down to 66,519 according to the data presented by the BNR official.
Bankers were not harsh enough in cutting internal costs, arguing they needed to retain development potential for when the market rebounded and this way passed on some of their internal costs to the existing good paying customers.
(English version by Loredana Fratila-Cristescu)