Retail chains dispute central bank measures set to contain consumer lending

The Romanians dream of buying TV sets, refrigerators and washing machines with no guarantors or down payments needed. However, these dreams may never come true, if the measures discussed at the end of last week by the National Bank of Romania to contain consumer lending are eventually enforced.

On one side, there are the NBR officials, who are backed by Premier Adrian Nastase. On the other side are the retailers of electronics and household appliances, which have instalments to thank for 70-80% or even more of their turnover.

“The set of measures, originated by NBR, would be a rough intervention – even if it was recommended by the International Monetary Fund – by the central bank, which would thus interfere with consumer lending that should be only regulated by supply and demand,” says Lorand Szarvadi, general manager of Interexpo, the company operating the Domo retail chain. According to Szarvadi, NBR only had to establish a national credit bureau, which should keep track of all loans, including those granted to natural persons, in order to eliminate fraud.

Marius Ghenea, general manager of the Flanco retail chain, is also expecting the National Bank’s decision.

“In our opinion, this intervention does not address a real problem of the Romanian economy, but could, in fact, originate such a problem,” Ghenea says. According to the Flanco official, any changes in the consumer lending conditions had an immediate impact in the past. “We should remember the launch of the ‘equal and fixed’ instalments which marked the beginning of the large scale consumer lending last spring, or the elimination of the need to produce a warrantor (this summer), which also boosted the market. We can safely say that the set of measures discussed by the NBR would have a similar impact, namely a drop in this type of sales (in instalments). However, we cannot give an accurate estimate of the aforesaid change, since we do not know if and what new measures are to be applied,” Flanco general manager added.

On the other hand, the general manager of Altex retail chain, Dan Ostahie, supports some of the measures tackled by the NBR. “We have seen an increase in bad debts where consumer lending is concerned and, naturally, a prudential policy in this sector had to follow. I do believe, however, that enforcement of the recently announced measures could block this type of credit, which would hurt both the banking sector and the retail chains,” Ostahie claims.

The NBR Board last week tackled a set of measures aimed to contain the consumer lending growth, among which setting the monthly repayment rate at 20-30% of the loan applicant’s income, as compared to the current requirements of 50%.

Premier Adrian Nastase said he backed the decision made by the National Bank, as soaring consumer lending may push imports up, generating inflationist pressure.

“For the time being, it is more like a talk about ways to keep enthusiasm for consumer lending within reasonable limits. Certainly, banks are more than happy to grant credits and cash rates, but this can trigger an inflationist pressure which we cannot overlook,” Adrian Nastase was quoted as saying by Mediafax.
ionut.bonoiu@zf.ro ; razvan.voican@zf.ro