“The big breach in the case of foreign currency lending happened in 2007-2008, when the higher capital inflows reduced the efficiency of the restrictions. In fact, we knew that the (limiting) measures can only work for one or two years, after which they were going to be bypassed,” Popa said at the Romania Financial Forum 2011 organized by Mediafax and the central bank.
“Today we have a new set of measures which are not isolated, but they refer to a European context,” he added.
Popa said the new regulations are not intended to eliminate foreign currency lending, but to create a balance between this type of loans and the loans in lei, while protecting the population from risks associated with the currency exchanges.
The central bank has drafted a set of measures to limit consumer loans in foreign currency. The new rules stipulate Romanian banks will have to reduce the maturity of consumer loans to five years from 20 currently, while extending minimum guarantees to 133% of the loan’s value.
Moreover, banks will not be able to provide mortgage loans unless clients pay at least 30% upfront for financing in euros and 15% minimum for leu-denominated loans. The down payment for lending in other foreign currency was set at 40% minimum.
Romanian overdue private loans rose 2.2% on the month to 20.18 billion lei (EUR4.68 billion) in August, equal to 9.27% of the total lending, according to central bank data.
Past due loans in Romanian lei were up 2.7% on the month to RON9.16 billion in August, while overdue foreign currency loans inched up 1.8% to RON11.02 billion. (EUR1=RON4.3144)