Banks need to urgently resume lending in order to support theeconomy, while losses in the banking sector cannot be plugged bydriving customers to bankruptcy, believes Nicolae Dănilă, a memberwith the Board of Directors of the NBR (Romanian centralbank).
"Banks need to urgently return to their principal mission: to grantloans in order to support economic development, by efficient use ofthe financial resources they attract from the Romanian market. Inview of returning to economic growth and to lending, banks'business model will need to change. Most likely, the model ofeconomies of scale will be dropped in favour of one that can ensuresolid, but gradual growth, based on a tight and long-termrelationship with customers," said Dănilă in an analysis titled"The role of the banking system in the return to economicgrowth."
He says the major increase in overdue and in doubtful loans from2007 until 2010 shows banks did not calculate the non-repaymentrisk very well, and relied on covering the losses through the largevolume of business.
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