Banks need to fund manufacturing, trade, investments and have people who can read a company’s balance sheet and not just look at consumers.
“Banks have not developed the capability to finance the entrepreneurial sector, i.e. day-to-day operations, manufacturing, trade and investments. The so-called ‘trade finance’ or ‘project finance’. Funding such a project is rather complicated,” Mugur Isarescu said at the news briefing after the monetary policy session on Tuesday.
“Banks have to be very careful in finding experts. One has to look at a balance sheet, know how to read it and assess it, which is rather complicated. It is not up to the interest rate, but to an entire business plan that banks need to develop. Banks must not only look at consumers.”
The central bank governor has previously recommended banks to look for niches and shift from lending money to consumers to financing the real economy. The governor criticized banks for having developed their networks with consumers in mind staffing them with lots of “loan sellers” and very few people who can actually read a balance sheet, which makes it hard for them to shift to corporate lending.
Banks continued to sell consumer loans conducting campaigns from time to time to attract customers. However, the loans granted to consumers have constantly declined over the last four years, as new sales have been lower than repayments. The number of consumer loans has fallen by about 1.5 million accounts since late 2008.
Consumers have quite a lot of debt to repay, and the lack of loan demand may upset some of those living off consumer finance, the governor said on Tuesday.
Bankers did try to focus on corporate loans during the crisis but the growth pace was hardly significant.
“Let’s stop seeing this lack of lending appetite as something that solely depends on BNR’s policy. The lending rebound is also up to a decline in loan cost, but in today’s Romania it mainly depends on the resources used to finance lending. Do not forget that there’s is a rather strong but orderly deleveraging process going on.”
Isarescu also said that a lower monetary policy rate would discourage domestic savings, which are insufficient and instead of stimulating economic growth it would create an adverse effect because of the lack of funding resources.
(English version by Loredana Fratila-Cristescu)