Romanian Banks Should Rethink Business Strategies - Ctrl Bker

"The substantial growth of overdue and non-performing loans since 2007 and until 2010 indicates the banks didn't properly calculate this risk (the loan reimbursement risk)," said Nicolae Danila, board member at the central bank.

In a presentation published Tuesday on the central bank's website, Danila said the banks should focus on a business strategy that could ensure a solid, even if gradual growth instead of a strategy based on a scale economy, which has proved "unfitted" for the Romanian environment.

A bank's relationship with its clients should aim at a long-term partnership during which the bank should get to know and understand the clients' necessities, the central bank official added.

Additionally, the lenders must find a way to balance the maturities of their assets and liabilities.

"Finding an agreement between maturities would allow lenders to avoid any dissonance on the money market that may occur due to a change of local or external factors. In 2008, the banks in Romania would draw their resources from short-term deposits (95%), while providing medium- and long-term loans (75%)," Danila said. "This situation still stands," he added.

A solution would be to change the structure of banking instruments to attract more resources on the long term, the central bank official said.

Moreover, the lenders should always factor in the risk of overgrowing loans in foreign currency, Danila said.

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