“The excessive development of credit was done with a benign, excessively benevolent towards banks with foreign capital, forgetting they have their own governance, and the battle over market share can reach a dangerous pace,” Isarescu said.
He added that during 2006-2008 he had meetings with heads of foreign banks, who wanted to go fast from market shares of 5% to 15-25% in Romania, and if you put market shares together, they amounted to around 200%.
“When local managers send such messages, you have to prick up your ears. We did at the BNR, but I think it was a little too late and we saw only the good side of the excessive development of credit,” Isarescu said.
The central bank governor gave a speech on Tuesday at the launch of the book titled “How Emerging Europe Came Through the 2008/09 Crisis,” edited by Bas B. Bakker, head of the regional Emerging Europe division of the International Monetary Fund, and by Christoph Klingen, the deputy of the same division.
Isarescu reminded the audience the causes of the crisis in Central and Eastern Europe analyzed in the work of the IMF economists, saying they are very similar or even identical among countries in the region: major inflows of largely speculative capital, the lending boom, especially of foreign currency lending, the desire to catch up, the unsustainable growth of public sector wages and the expansion of the state apparatus.
During 2007-2008, private lending boomed in Romania, reaching growth rates of as much as 40%.
(English version by Daniela Stoican)