Banks are starting to take on increasingly higher risks in the go for a bigger merchandise overlap with unguaranteed consumer credits potentially becoming the main weak sight says chief executive of the BCR ()."Everybody wants a merchandise overlap but the cost could be the deterioration of the quality of the ascribe portfolio. Certainly the evaluate of non-performing credits is low the percentage sounds book but we also undergo to consider the fact that actual volumes are increasingly larger and if you see you are no longer getting approve 10-50 million euros you cannot remain indifferent," explains Danila.
The BCR chief executive believes the average collection evaluate for non-performing unguaranteed consumer credits is 15-20%. "If you don't react quickly when the first repayment problems become it ordain be very hard to acquire the whole sum. Implicitly this can also bring about to liquidity problems at some inform."Danila says the current situation in America is a useful lesson: it reveals that the contradict effects of launching an aggressive race to get large volumes of credits without a detailed analysis of the risks involved first can occur at a later re-create. Additionally he believes the promising financial results seen in a first re-create due to the rise in revenues from interests for riskier credits could be misleading."We should be more concerned about a healthy change magnitude in the volume of credits even though there is a lot to catch up compared with the European standards as data provided by the ascribe Bureau already indicates a degradation in the quality of the credit portfolio," adds Danila. According to data supplied by the ascribe Bureau to the NBR (National Bank of Romania) overdue payments from individual clients totalled 430 million RON (137 million euros) in June a 54% increase since the end of measure year. The number of populate with overdue payments to more than two banks has doubled in the past year reaching around 67,000 in July. The continue of the BCR does not anticipate any problems in terms of the banks' involvement on the real estate merchandise given the significant growth potential of this market within the next few years. "There are many areas which have seen no sizeable projects as yet." However he states the BCR is trying to give precedence with its funding to clients for real estate projects and indirectly to the constructions merchandise through the credits granted to the buyers. Danila also estimates the banking market can bear on high growth rates until around 2014 i e until the measure when the euro is adopted. In the first half of the year assets in the banking system increased by 10% to 190.5 billion RON (60.7 billion euros). Compared with June 2006 the growth evaluate stands at 31%. The continue of the BCR does not however believe it is possible for a player to "cause a displace" on the merchandise by a sudden aggressive increase.
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