UniCredit CEO: Corporate Sector Is Still Suffering

05.11.2011 ZF English

Consumer loan demand is showing signs of growth, but it is not the healthy result of wage raises, instead reflecting the need for money of people short on cash, says Rasvan Radu, CEO of UniCredit Tiriac Bank.

"Demand for consumer loans should come as a natural result of wage raises, but it cannot take place while the corporate sector is still suffering and there are companies going insolvent. I don't even know if we should wish for an increase in consumer loans under the circumstances," says the head of UniCredit.

He believes the "statistical exit" from recession, which will be officially recorded as of the first quarter of this year does not mean much in terms of the real economy, where there are still companies facing major problems.

At the end of the first quarter, the banking sector had 24.5 billion lei (EUR5.99 billion) in provisions, up nearly 45% against the end of March 2010, but in the course of slowing down their growth rate.

The sector where new provisions are more likely to be set up is the corporate one, where the lack of demand continues to affect companies that have no export operations, while in the retail sector the situation has somewhat stabilized, with clients that have euro-denominated loans benefiting from the recent strengthening of the leu. (EUR1=RON4.0885)