Banks Slow Down Restructuring Process

05.23.2011 ZF English

Expecting the economy to recover, bankers have slowed down even more the restructuring of their territorial networks and number of employees, while the average salary reported by the central bank stayed at over 3,000 lei (some EUR730) in net amount in the first quarter.

The territorial network lost 33 branches in January-March period, with 6,137 branches and offices still operational on the market, 207 fewer than last March. Banks had closed 84 branches in the first quarter of 2010.

Bankers have avoided drastic branch network adjustments in the past two years, despite the plummeting loan sales amid the crisis, believing they will thus be ready to resume growth at the moment the economy picks up.

After two years of recession, it has become clear, though, that loan sales will not revert to boom year levels and the question is how these branches could generate enough revenues to justify their existence.

"The business model needs to become more flexible as banks have very high fixed costs, requiring a rapid turnover increase, which used to be based on massive loan sales. The situation has changed dramatically, though, amid the economic downturn and now banks have to adopt a different structure," believes financial analyst Dragos Cabat.