CPBR’s position concerning legislative initiatives for the conversion of loans (press release):
The Council of Banking Employers in Romania (CPBR), the employers’ organization of the country’s banking sector, believes that any initiative concerning the conversion of foreign‐currency loans must observe the principles stipulated by the European Directive no. 17 from 2014*, which establishes that loan conversion operations shall be carried at the exchange rate on the actual conversion date.
As it has already stated in September 2014, although the European Directive no. 17 shall be applicable only as of March 2016, CPBR believes that adopting new national legislation harmonized with the principles of the Directive is possible even as early as this year, so that any subsequent conversion operation can guarantee observance of the Directive’s principles.
As concerns the various proposals coming from lawmakers or members of the civil society, which call for the use of exchange rate levels other than the market rates for the conversion of loans granted in Swiss francs, we believe that this issue should be treated on a case‐by‐case basis between banks that have granted such loans and their clients, in order to reach viable solutions.
CPBR’s member banks that have granted loans in that currency in the past state that they have already initiated consistent actions to reduce the burden of payment increases following the appreciation of the Swiss franc both against the leu and other currencies, as a result of the decision of the Swiss central bank. Such bilateral measures, which those banks shall continue applying, are already known from the public announcements made in the days following the appreciation of the Swiss franc.
Regarding the overall conversion of loans, aside from those denominated in Swiss francs, each of the CPBR’s member banks shall observe its own priorities and conversion practices with regard to their existing stock of loans even in the absence of specific legislation aimed at explicitly regulating such possibilities, but while respecting the norms and regulations of the National Bank or Romania as well as the principles and spirit of European directives.
In the context, it’s worth reminding that several CPBR member banks have already performed the conversion of loans of different types over the course of the past several years. This has happened upon the specific request of clients and when the financial situation of the borrower and his/her family indicated that a conversion operation allowed for the successful extension of the relation between the bank and the client.
It is in the banks’ best interest to be able to preserve their clients and we are therefore optimistic that they shall propose the most efficient offers possible, which should preserve a balance between clients’ possibilities to repay their loans and banks’ capability of limiting the losses they’re already piling up, while still be able to contribute to economic growth.
Just to back such statements, we hereby remind that during the year 2011, in the context of the drastic salary cuts by 25% in the case of millions of government employees, banks understood to accommodate the clients whose incomes were significantly affected by the measure through specific, bilateral measures even in the absence of legislation obliging them to such actions.
We are convinced this will happen again and we therefore encourage clients with real problems to contact their banks in order to reach feasible solutions.
At the same time, we would like to emphasize that forcing legislative solutions that fail to respect the principles of market economy or to observe the relevant European principles can generate, besides a lack of predictability in the economic and investment environments, a series of inequitable situations among clients.
For example, borrowers who took loans totaling hundreds of thousands or even millions of Swiss francs or other currencies to invest in real estate deals, would benefit from the same conditions as those who, for various reasons, can no longer repay their installments for the sole family property they bought.
CPBR’s member banks therefore recommend their clients to be cautious in taking decisions at times of volatility in the currency markets, which can affect the consequent repayment of long‐term loans.
Moreover, CPBR calls for responsibility on the side of the representatives of state authorities, but also from economic and legal professionals that express their opinions publicly or during consultations with clients, to refrain from promoting hasty decisions that can generate negative effects in the long term.
As concerns the provisions of Government Ordinance no. 46/2014, aimed at granting certain tax breaks to clients benefiting from the restructuring of their loans, CPBR’s banks have already confirmed the latest updates made in consultations between the Finance Ministry and The National Bank of Romania and have thus agreed with the implementation of social protection measures.
Finally, as concerns the legislation draft under consideration for the insolvency of private individuals, CPBR’s member banks have stated that adopting such legislation is indeed welcome, but only as far as it can be properly defined and implemented so that it can represent a solution solely for extreme cases.
Such legislation could thus be beneficial only as long as it would not encourage abuses during its implementation as well as a lack of loans repayment discipline among private individuals, but on the contrary, would eventually determine such individuals to manage their budgets more efficiently for a real prioritization of their spending habits and needs.
Unfortunately, while at the stage of a concept, we believe this initiative failed to be properly promoted, especially as it has been circulated as a potentially escape solution to certain consumers who, to a lesser or greater extent, are facing financial difficulties but nevertheless seek solutions to preserve their current living standards even though their incomes dropped following the financial crisis.
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
Pictured: Steven van Groningen, CEO of The Council of Banking Employers in Romania (CPBR)
