National Bank of Romania partially adjusts lending norms

The National Bank of Romania (BNR) announced on Thursday (Jan 15) it is partially adjusting lending norms, having decided to drop one of the non-essential requirements to the loan-extension scores, i.e. the stress test.
"The Administration Board of the National Bank of Romania, at its meeting on January 15, 2009 approved the amendment of the Regulation no. 11 from 2008 on the modification and completion of the BNR Regulation no. 3 from 2007 on limiting the lending risk to the loans for individuals", the central bank said in a press release on Thursday.
The National Bank's Administration Board approved the Regulation in Aug. 2008 (to have been enforced from Oct. 2008) with a view to strengthening the prudential framework and improving the risk management relevant to the lending to individuals amid the persistent crisis in the global financial markets.
The analysis made has revealed that the loan non-repayment rate is substantially lower in the case of the debtors having guaranteed loans with mortgages when compared to other debtor brackets (such as non-guaranteed consumer and personal need lending).
Taking into account such remarks and in order to limit the effects of the global crisis on the Romanian economy, the National Bank's Administration Board believes it is adequate to differentiate between the requirements for extending mortgage loans and the requirements applicable to other loans and consequently to amend the Regulation.
The Administration Board, therefore, decided that the lending institutions, after extensive analysis, should have the possibility to calculate a higher indebtedness of the loan applicants in those cases when they guarantee the loans by good-quality real estate property.
The central bank, in its capacity of a regulatory and surveillance authority, outlines the general framework on the risk management for the lending institutions and the non-banking financial institutions in order to provide financial stability.
However, the concrete establishment of the lending requirements and the risk management requirements rests with the lending institutions, which issue their own lending norms that must observe the relevant general guidelines.
As such, the lending evolution chiefly depends on the lending institutions' capability to mobilise the required financial resources in a sustainable manner, while at the same time observing the prudential principles.
The new provisions will take force on the day they are published in the Official Gazette.
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