Local bankers think that mortgage loans are a wide boulevard, but this ends in a narrow and clogged alley, Romania’s National Bank (BNR) governor Mugur Isarescu said on Thursday, July 5, at the ZF Bankers Summit.

He urged local banks to create another market for their banks and start lending to companies as the retail segment can’t fuel growth anymore.

“We need an increase in financial intermediation that is sustainable, healthy and balanced. Romania can’t rely excessively on the household segment,” Isarescu said, local Agerpres reported.

“It’s not the National Bank that will discourage lending, as I’ve seen in the media. This will be discouraged by the current model and market realities,” he added.

He said it was unsustainable to have a high indebtedness degree for people with low income because this leads to high vulnerability to interest rate increases and significant risk that the debtors won’t pay back their loans.

A significant segment of the population, who earn less that the medium wage, is over-indebted, according to Isarescu. Thus, “the dominant model oriented mostly on lending to the retail segment and neglecting the corporate segment is not optimal,” the governor warned.

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editor@romania-insider.com