The Council of Banking Employers in Romania (CPBR) position concerning legislation drafts on the conversion of loans (press release)
The Council of Banking Employers in Romania (CPBR), the employers’ organization of the country’s banking sector, hereby states the position of its members concerning the existing legislative initiatives aimed at enforcing the conversion of foreign currency loans, as well as the principles that CPBR’s members are considering in order to meet this goal.
CPBR, while coherent with its principles of promoting greater transparency in the banking industry, hereby states that its member banks have in recent years already performed the conversion of thousands of loans originally granted in foreign currencies, into lei or euros, upon the request of their individual private clients and in accordance with the applicable crediting norms.
CPBR’s member banks shall continue this conversion process even in the absence of specific legislation aimed at regulating the conversion possibilities, while taking into account the norms of the National Bank of Romania, as well as European directives.
CPBR believes that the various drafts of legislation including those discussed even in the past few days in the Romanian Parliament’s Commission of Budget, Finance and Banks, should observe the aspects subjected to regulation in line with the applicable European directives.
CPBR’s members support consumers’ rights to be informed about the fluctuations in the exchange rate, as well as that of being able to benefit from the conversion of their current loans from the original foreign currency into lei, euros, or any other lending currency on offer by the banks provided that clients obtain their incomes in that currency, by applying provisions in line with the European Directive no. 17 from 2014*.
Additionally, in order to accommodate the requests and needs of their clients, CPBR’s member banks could consider to extend the applicability of requirements concerning conversion, or of the implementation of other mechanisms aimed at reducing exchange rate risks (e.g. restructuring or refinancing) stipulated by the European Directive.
As such, the conversion of loans could also be applied not only to guaranteed foreign currency loans granted beyond the date of the implementation of the Directive, but also to all types of existing foreign currency credits regardless of whether they are guaranteed or not.
Considering the above‐mentioned statements, the initiatives of CPBR’s member banks aimed at the conversion of loans are based on a set of common principles ‐ simple and fair – presented below. We hereby state that CPBR’s member banks are already implementing principles 1‐10 in their greater part, while also working on optimizing the implementation of
principles 11 and 12 until the end of this year in the spirit and via the transposition of the European Directive no. 17.
1. The Right to Conversion of Foreign‐Currency Loans
Any individual (private) client that has obtained a foreign currency loan from a CPBR member bank benefits from the right to convert that loan in lei, euros, or any other lending currency on offer by the bank, provided that the client obtains its income in that other currency;
2. Currency of Conversion
The conversion of the loan is performed from the currency in which the loan was granted, into lei, euros, or any other lending currency on offer by the bank, provided that the client obtains its income in that currency. (Observation: as opposed to practices in other countries ‐ e.g. Hungary – where loans were just expressed in foreign currencies but disbursed in the domestic currency, Romanian consumers benefited from credits in the very currency they asked for, including in Swiss francs);
3. Frequency of Conversion
Clients can ask for the conversion of their loans up to and until the elimination of the exchange rate risk;
4. Applicable Exchange Rate
The conversion of the loan is performed at the exchange rate applicable at the date of the conversion operation;
5. Applicable Pricing Structure
The conversion operation is performed under similar price conditions as those on offer by the bank for the new currency in which the credit will be converted, unless agreed otherwise by the parties;
6. Repayment Period
The period of repayment of the loan remains unchanged. The lending period can be extended, however, without extending the time (duration) for which the credit was granted;
7. Collateral
The conversion operation, which is specific to the restructuring operations, does not require additional collateral. Banks do not charge additional costs for the re‐registration of existing mortgages. The only associated costs are those charged to clients by third parties;
8. Other contractual terms and conditions
All the existing conditions and terms prior to the moment of conversion remain unchanged, without affecting clients’ rights to later ask for operations such as: early repayments, extension of repayment period, restructurings, refinancing etc.
9. Information for clients concerning conversion
Banks supply all information, complete and clear, to clients that opt for conversion of loans;
10. Assistance and Facilitation for Conversion
Banks offer assistance to the clients in making the necessary arrangements to enable a smooth and timely conversion;
11. Implementation of the Loan Conversion Process
CPBR’s member banks shall define together with the BNR, ANPC and other consumer protection associations the necessary additional instruments aimed at informing customers with regard to the exchange rate risks and of periodical reporting of the implementation of these principles in the wider context of the transposition of the European Directive no. 17;
12. Monitoring of the Conversion Process
CPBR is committed to ensure appropriate monitoring of the application of these principles. CPBR’s member banks are Banca Comerciala Romana, BRD ‐ Groupe Societe Generale, Raiffeisen Bank, UniCredit‐Tiriac Bank, ING Bank Romania and Volksbank Romania.
The six banks together own about half of total assets in Romania’s banking system, while their employees make more than a third of all employees in Romania’s banking sector.
* Applicable as of March 2016: Directive 2014/17/EU of the European Parliament and of the Council of 4 February 2014 on credit agreements for consumers relating to residential immovable property and amending Directives 2008/48/EC and 2013/36/EU and Regulation (EU) No 1093/2010 Text with EEA relevance http://eur‐lex.europa.eu/legal‐content/EN/ALL/;ELX_SESSIONID=zm9HJNXRcY9GLZ71GHqN2h05BkhvF6pbGxYFFKg2RMKtHvn6xhNm!‐
1095264507?uri=CELEX:32014L0017
