Isarescu: Reduction of RRR will serve as stimulus to mortgage lending

By excluding the Fx liabilities of banks with residual maturity larger than two years in the calculation methodology of reserve requirements, mortgage lending and investment process will be stimulated, even if NBR’s currency reserves will be diminished, said the NBR governor, Mugur Isarescu.

“Any move in this direction is beneficial to Romanian economy and for lenders, even if it would entail a contraction of the currency reserves”, said Isarescu.

The measure would trigger a “much solid and healthy” mortgage lending and investments process, despite the fact that those money would be wiped out from the currency reserves.

Isarescu added that converting banks’ short term debt to long-term is not necessarily equivalent to a narrower exposure of parent banks in Romania.

NBR’s board decided on March 31 to pare the banks’ RRR for Fx liabilities with two-year residual maturity to bone. Analysts say this move will open the road to banks’ revision of resources as to increase the long-term ones.

Fast-paced growth for business lending

Lending is expected to rise in the coming period especially in business segment, said NBR’s governor, adding that “lending is not on ice for all banks”.

“We will see major changes in the banking system in the coming period, especially in terms of banks’ exposure. We will analyze and present data to show that there is not necessarily a standstill in lending activity for all banks”, said Isarescu.

“I think the loan volume will rise in the coming period but faster for business segment”, he added.

As for the non-performing loans, the governor said in certain banks, the ratio is higher but within the tolerable range.