Central bank analyses point to increase in insolvencies (bank official)
The National Bank of Romania’s analyses show that we are likely to see an increase in the number of insolvencies in the coming period, which would be in line with European expectations, Cristian Popa, member of the Board of Directors of the National Bank of Romania, said on Monday, told Agerpres.
„In this environment of rapid economic deceleration and adaptation to a global environment in which capital is more expensive, our analyses show that we are likely to see an increase in the number of insolvencies in the coming period, which would be in line with European expectations. And that should not come as a surprise. Very important: it’s not just us. Analyses by our colleagues in Western Europe show the same thing. In Germany it is already starting to show up in figures. Also, as governments start to restrict support schemes, the resources available to some companies will become scarcer. The Czech Republic has already started to tighten its belt. And somehow it is normal that governments seek to limit their interventions in the private economy, the pandemic has passed/the shocks have generally passed. In this context, of a reduction in broad support, a necessary reduction if you ask me, we expect to see an increase in insolvencies, but also some increase in the default rate in the banking sector. Important: we are not talking of radical changes, we are coming after a decade of steadily declining NPL ratio, but rather of normal developments, expected in a complicated economic environment,” said Cristian Popa, at the conference „Opportunities and challenges in preventive restructuring.”
He mentioned that the banking sector is well prepared to face these developments, as it is capitalised, liquid, well regulated and the National Bank of Romania is a firm supervisor.
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He also said that the new assessments reconfirm the prospect of a continued decline in the annual inflation rate over the next two years. The latest forecast assumes a somewhat higher trajectory for 2024, due to the increase in indirect taxes, but also a return to the corridor in 2025.
