The high volume of unsecured loans banks granted between 2005and 2008 is currently spawning big problems for banks, with theweight of bad loans in overall loans granted during this periodrevolving around 15%, according to the data included in the latestfinancial stability report published by the NBR.
By comparison, the weight of bad loans in the case of real estateloans granted between 2005 and 2008 stands at around 3.5%.
Individuals and companies in late June held loans worth 310bn RON(72bn euros), with the largest part as foreign currency-denominatedones. One quarter of this amount were loans granted by foreignbanks and 9% were loans issued by non-bank financial institutions(NBFI).
Over the past year and a half, foreign banks have boosted thevolume of loans granted in Romania, while domestic banks have kepttheir exposure flat.
Provisions set up by banks in June covered 63% of the value of badloans, against a coverage level of above 120% in late 2006. Thecoverage level is similar with the average posted at the EUlevel.
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