Message of the President

This year, the Romanian Associations of Banks is celebrating 33 years of existence. It is an opportunity to look back, to see how the banking system and services have evolved, but especially to look forward, to the future – to see how we could do things better, and to look at the challenges brought by the shift in generations and the revolution of digitization.

A look at the past

If we could travel back in time, more than 30 years ago, we would see an underdeveloped banking system, relying on 2-3 state-owned banks, with rudimentary operations: there were no cards, the options for transfers and currency exchanges were limited, and we had huge gaps compared to western financial institutions. To a great extent – in terms of products and services off ered to customers – we managed to reduce these gaps. But this was not an easy road.

The first years after the Revolution and the transition period to the market economy in Romania were characterized by lack of experience and lack of an effi cient infrastructure, which put in an unfavorable light the real progress made by the Romanian banking system. The numerous crashes and bank scandals were events that have shaken the confi dence of the population and led to regrettable social convulsions.

The last years of the 20th century

The last years of the 20th century (the period 1999/2000) marked an important change in the ownership structure of the share capital and net assets through the “absorption” of Bancorex by BCR and the preparation for privatization of Banca Agricolă. The share of state’s ownership in banks was drastically reduced, from over 50% in 1998 to under 33% in 2001.

It was a period of growth and reaching maturity. And the entry of experienced players in the market contributed to the recovery of the gaps compared to the West, to modernizing internal standards and rules according to the model applied in the Western parent-banks, and last but not least – to capital infusions to support the accelerated growth of lending.

The crisis of 2008-2010

This period was followed by the 2008-2010 crisis, which aff ected even fi nancial institutions and systems in more mature regions like the US and Europe. Romania has not been spared – we have witnessed an increase of nonperforming loans close to alarming levels, and a wave of disputes with customers. But fortunately, there were no bank failures, or bail-out measures in Romania, as it happened in other countries. I like to see the half full side of the glass: that this tumultuous period taught us to be more transparent in the relationship with our customers, more open to listen to their problems and to fi nd solutions – together.

And now, even though we’ve gone through two great crises: the global fi nancial crisis and the current health crisis, we can say that we have a more resilient banking system that has made real and notable progress. Over the last three decades, the total direct, indirect and induced impact of the fi nancial sector in the production of goods and services amounts to 198%, of Romania’s GDP in 2020 , according to an impact study conducted by KPMG Advisory. And over the 14 years since the integration into the European Union, the total amount of loans granted by banking system in Romania is equivalent to the Gross Domestic Product of 2020. The volume of new loans, granted between 2007-2020 is 3.6-fold higher than the balance of private sector loans in 2020.

The consequences of the pandemic

The consequences of the pandemic on economies worldwide are not yet fully known, but the banking system in Romania has played an important role, along with the authorities, to provide support for the aff ected households and companies. 12.7% of total loans benefi ted from public and private moratoria by the end of March 2021, according to the statistics published by the National Bank of Romania. The entrepreneurial environment has struggled and managed to carry on its business forward and adapt to all these challenges generated by the pandemic. And this was absolutely remarkable!

And there was also another remarkable development brought by the pandemic. After almost a decade of decline, the level of fi nancial intermediation saw a reversal of the trend last year, increasing to 26.8%. Also, measurements by specialized studies also show an increase of the fi nancial inclusion too, up to 67%, on the background of accelerated digitalization. But the digital transformation did not start with the Covid-19 pandemic, nor will it end with it. That is why, the digitalization of the banking system – probably the most “exotic word of the moment” – must continue at a sustained pace, so that we can align in real time with the needs of customers and maintain the growth trend for financial inclusion. Our common objective is the to continue to cooperate as closely as possible in order to optimize the measures that support economic growth by: increasing lending, accelerating digitalization and supporting fi nancial inclusion. The speed of change and adaptation to digitalization is essential, so should be our concern to improve customer experience.

I conclude here by expressing my thanks to all the dialogue partners of the Romanian Associations of Banks, whether we are talking about authorities, industry partners, the media, governing bodies of banks and affi liated members, members of Specialized Commissions and the RAB executives for the results obtained and for increasing the contribution to the development of Romania’s economy.

Bogdan Neacșu,

The President of the Board of Directors
Romanian Association of Banks