BCR CEO calls on NBR to loosen lending regulations

The National Bank could help restore confidence on the lending market by loosening the retail lending norms, to reinforce the impact of rate cuts, said Dominic Bruynseels, CEO of BCR. The central bank had tightened the lending regulations in the autumn of 2008, when the financial crisis erupted.

“The NBR could help us by relaxing some of the measures it introduced in October 2008. It was bad timing for dramatic changes in lending criteria, which coincided with the onset of the crisis. We are still working under that regime, and relaxing some of the regulations would help rebuild the clients’ trust, together with the burgeoning interest rate cut drive,” says the head of the biggest bank on the market.

In the autumn of 2008, the NBR was still concerned with slowing the lending pace, believing Romania would not be too hard hit by the international crisis, so that it forced banks to restrain access to loans.

As a result, the maximum borrowing caps were reduced, and many clients no longer qualified. The NBR promised bankers to ease up the norms, but has made no decision so far.

The respective moves probably prevented an even bigger increase in the number of bad loans, but also discouraged loan seekers, which precipitated the market decline.

Consequently, Bruynseels says the NBR could have a better dialogue with banks and could cut red tape.

“I believe the NBR did a good job in the context of the crisis, despite taking a conservative approach. The banking system has weather the crisis very well also due to this conservative approach, reflected in minimum reserves or provisioning requirements, but now the NBR could help us by relaxing some of the constraints it introduced in 2008,” the BCR CEO told an event organised by ASEBUSS Business School, one of the oldest business schools in Romania.

He believes banks should focus on reviving lending during this period, but they should not be afraid of saying “no” to certain clients, either. Also, Bruynseels foresees many bankruptcies among SMEs.