The two banks currently operating on the housing savings and loan niche, Raiffeisen Banca pentru Locuinte, which pioneered the system, launched in 2004, and BCR Banca pentru Locuinte, which became operational in 2008, have attracted about EUR175 million in deposits, but the loans granted to customers barely exceed EUR11 million.
The state lends support to this system by granting bonuses to clients for the amounts they save every year, and one of the arguments is precisely that banks create leverage as the money raised from clients as deposits return to the economy as loans for real estate investments. The state thus gets back its money indirectly via taxes.
In Austria, for instance, the government allocates EUR100 million to EUR155 million in bonuses a year, but the volume of loans granted by housing banks (the so-called “Bauspar”) system exceeds EUR17 billion, accounting for 18% of the total real estate loans. This system injects over EUR3 billion in the economy ever year.
In Romania, the state will transfer about 80 million lei (EUR19 million) to the housing banks this year corresponding to the savings made by the clients throughout the entire 2010. The amount, however, is higher than the total volume of loans granted by the two banks so far.
The state gives each customer a 25% bonus of the amount saved every year, up to EUR250. This is one of the most generous bonuses offered by the countries to have implemented such a system.
Raiffeisen Banca pentru Locuinte (RBL), the oldest player on this market, had attracted EUR57 million in deposits by the end of last year. The loans granted stood at merely EUR11 million.
“We are far from the plateau stage of the system in Romania, We should be comparing the volume of loans to the volume of contracts in the allocation stage,” says Aurelia Cionga, vice-president of Raiffeisen Banca pentru Locuinte.
BCR Locuinte is currently testing its lending products, because most of the contracts signed by its clients are still in the savings phase. The bank has grown faster than its rival so that its deposits totaled RON490 million (EUR118 million) at the end of March.
Usually the savings period lasts five years at least, with the average duration of contracts set at 15 years, equally divided among the three phases (savings, loan and repayment of the loan). Both banks are also offering products with shorter savings periods (starting from 18 months), though.