It is riskier to believe that the crisis is over when it actually is not than to expect it to last longer when it actually ends, believes Steven van Groningen Raiffeisen Bank chairman.
“Many are pinning their hopes on the third quarter, but if they are not confirmed, the first quarter of 2010 will be completely different. I am not convinced we are seeing all the effects of the crisis and we can say ‘the worst is behind us’, and in case the crisis continues, it would not be out of the question to see consolidation deals on various markets, including the banking sector, where there is a capacity that needs to be reduced.”
After all, the financing of acquisitions could be the main destination of some applications for new loans in the corporate sector, because no investments are being made in new production facilities or real estate, either, any more.
“It is obvious that transactions, opportunities for consolidation are being sought on the market. The crisis, however, was not harsh enough or long enough to force such moves. Many have survived until now on lower sales, on cost cutting and only if their business reaches the absolute minimum and they lose all hope will they be ready to sell,” Van Groningen says.
As for the coming months, he says one cannot overlook the political situation: “Efforts will be made in the fourth quarter to avoid problems, but the big question is what will happen in the first quarter of next year
Raiffeisen’s boss believes that the main lesson of the crisis, especially as far as banks and their clients are concerned, is that it is not wise to take on debt to the maximum by trying to manage risks that at some point become unmanageable.
“Banks in Romania should no longer rely on refinancing from abroad and it is important for us to be more balanced in terms of the loan/deposit ratio; the lesson for companies is that it is best not to do business with too much borrowed money. The adjustment process has now begun, but it will take a while. We cannot just say, <it’s over, it’s done>.”
On the other hand, the banker admits that with the rising unemployment and with hardly any profit made by companies, banks have little sources left to attract deposits from.
Van Groningen does not believe the share of the non-performing loans in the system is alarming.
“It should be taken into account that most clients pay their instalments on time, even if they have to make an effort for it, contrary to the impression that this might leave. We have two types of bad payers: those who want to pay, but can no longer do it for objective reasons and it is in our best interest to help them with solutions, and those who can, but will not, and prefer to blame it on the crisis. The latter (category i.e.) is a phenomenon we are still trying to figure out.”