With the benefit of the hindsight, we see now that the “before” was a rather exaggerated version of “normality”. Still, there is no point in blaming anyone; Romania was part of a global cycle, where access to cheap and plentiful credit in a high growth environment made a lot of things possible. Now that is over, as there is (quite rightly in my view) a global trend of higher risk standards and protections required by politicians and regulators who are picking up the pieces in countries where banks have failed – thankfully this did not happen in Romania due to prompt action by our politicians and regulators.
This will be a time in which money will not be as cheap or be in plentiful supply, a time in which people and companies are much more cautious, they borrow less, and continue to reduce the debts they have. Equally this will be a period where countries have to impose harsh austerity measure to keep their creditworthiness, something on which Romania has provided an excellent example to other European states.
In a way, we already did return to “normal”. This is the “new normal”, a world of greater uncertainty, but one where a trustworthy banking system (and country) has no problem in attracting customer deposits and banks continue lending based on how feasible business plans and projects are in the light of the “new normal”. We are returning to traditional, real economy, banking, in which banks stay close to customers, serving them well and in which banks focus their efforts on efficiency and on lending to those parts of the economy which produce jobs and products that people want to buy here and abroad. Gone are the days of a quick turn on a property deal.
There won’t be easy money around any more, but I assure you money there will be for deserving projects and creditworthy people. Real lending volume growth, but not the “good old days” will follow the economic recovery after companies start making profits and are confident to increase wages and employ more people. So, as local businesses will restructure to become more efficient, make more use of their internal resources, do more business on the internal market with each other and exporting or better accessing EU funds, they will also be able to get financing for their projects.
“God will be generous, but he won’t stock your bag”, and as this Romanian saying goes, I can see how descriptive it is for the times we live. There is no reason to be over pessimistic, just as there was no point in being overenthusiastic as before. There are and will be plenty of opportunities in Romania. I am convinced we will manage to benefit from those opportunities as long as we can plan better and be flexible to deal with changing circumstances. Good planning and flexibility allows optimism, and from that point of view, I am an optimist for the future of a better based and more sustainable Romania.
Dominic Bruynseels is CEO of Banca Comerciala Romana (BCR), Romania’s largest bank since July 2008