Debt discharge law effects are difficult to assess, says Mugur Isarescu

Though the debt discharge bill has a high level of uncertainty, it is expected that banks will fight back, stated BNR governor Mugur Isarescu during a press conference.

“The law is characterized by a high degree of imprecision. Those who cannot pay and those who possibly do not want to pay or have various options are placed in the same category. It is difficult for anyone to make a proper impact assessment, with the data we have,” the central bank representative explained.

However, banks will surely fight to protect their rights, he added, whether that means they will go to Romania’s Constitutional Court or to other decision forums, or that the loans they give out will be less and harder to obtain.

“So I think from here on we cannot see things clearly: it depends on the loan portfolios, the experience they have with various clients, the lawyers they have. Up until now you’ve heard only about some of the lawyers, but I assure you, you will hear from the others. Banks have lawyers too,” he warned.

When it comes to the fact that seven banks have already reacted to the law being passed by increasing the down payment for their housing loans, Isarescu said it’s a normal reaction, but it’s rather a defensive move, than an attack.

“If we talk about a bank with assets of 10 billion, for example, I don’t think any of you think that means it has a pile of money or buildings. No! It has a pile of loan files. Those are their property – claims to money. If a law is affecting them, it is absolutely normal to defend their properties, according to Romanian laws: the Civil Code, banking legislation, domestic and international. So there is almost a certainty, but this is not an offensive but rather a defensive move. According to the legislation in Romania and worldwide, banks are autonomous units, they are not subordinate to the central bank, they have their own profit-driven management. So each bank will present its policy following these legislative initiatives,” the BNR governor concluded.

Natalia Martian