Speaking at the ZF Bankers Summit’14 conference, Radu said the demand for mortgage loans that have gone bad is very low and lenders usually try to find solutions on their own to clean up their portfolios.
“We’ve been carrying negotiations to sell a package of non-performing mortgage loans, but we haven’t reached an agreement regarding the price. The demand is yet to meet the offer,” Radu said.
UniCredit’s chief said his institution is ready to write off all provisioned NPLs from its balance sheet, as per a recent norm introduced by the central bank.
“As for the NPLs extended to large companies, they cannot be sold in big packages; they must be sold individually, because of the high provisioning levels,” Radu told the participants in the conference.
He said UniCredit is not in danger of swinging to a loss once it has written off its bad loans, but other banks could have a less fortunate fate.
“It’s hard to say how the top three ranking will look like after the balance sheet cleanup.”
Besides, the entire banking system could look very different by the time Romania joins the eurozone, Radu said.
“By 2019, when Romania is projected to join the euro area, the number of local banks could be lower, of around 30 units.”
There are currently over 40 banks active on the local market.
On the other hand, the evolution of the banking system relies heavily on the economic developments.
“An economic growth of below 2% a year could be a bad scenario for Romania, as it wouldn’t allow for a real convergence to the euro area or for the development of the economy as a whole and of the banking market in particular,” Radu said.