BNR's Isarescu: banks lost 3.6bn lei over 11 months, converting Swiss franc credits would cost 5.7bn more

Romania's banking system lost 3.584 billion lei over the first 11 months of 2014, in line with the IFRS standards, according to a presentation by Romania's Central Bank (BNR) Governor Mugur Isarescu, held on Friday in the context of the problems generated by the Swiss franc's appreciation. (1 euro = aprox. 4.45 RON)

Photo credit: (c) GRIGORE POPESCU / AGERPRES FLOW

'The effort to remove non-performing loans from balance sheets has led to negative values of the banking system's profitability. The results are negative ... banks are recording losses, and these have shareholders have! If they continue to lose another two ? three years, they will start asking themselves... why are there losses Romania? We are closing the bank!,' said the governor.

Converting the Swiss Francs credits into lei (Romanian currency) at the historical rate would generate 5.7 billion lei in losses (0.8 pct of the Gross Domestic Product), and the conversion of all credits in foreign currency (Francs plus Euros) at the historical rate of the moment they were granted, would generate 9.8 billion lei in losses (1.4 pct of the GDP), he pointed out.

'Who is going to support all these losses? Mr. Piperea perhaps (lawyer Gheorghe Piperea ? editor's note)!" the BNR governor asked rhetorically.

The central bank's chief presented a series of calculations regarding the credits' conversion, of which results that a conversion carried out at the historical rate plus 30 pct would mean total losses of 3.9 billion lei (0.5 pct of the GDP), in case of all the credits in Swiss Francs, and 4.2 billion lei (0.6 pct of the GDP) in case of all credits in Swiss Francs and Euros.

Mugur Isarescu warned that, in case of a credits' conversion at historical rate, three or four...