Opinion of the European Central Bank of 7 December 2012 on certain conditions on granting loans (CON/2012/102)
Date: 2012-12-07
Institutions: European Central Bank
Subjects: Romania, financial solvency, financial stability, foreign currency, loan, national law

EN 

ECB-PUBLIC 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 7 December 2012  

on certain conditions on granting loans 

(CON/2012/102) 

Introduction and legal basis 

On  9  October  2012,  the  European  Central  Bank  (ECB)  received  a  request  from  Banca  Naţională  a 

României (BNR) for an opinion on a draft regulation on certain conditions on granting loans (hereinafter 

the ‘draft regulation’). 

The ECB’s competence to deliver an opinion is based on Articles 127(4) and 282(5) of the Treaty on the 

Functioning of the European Union and the sixth indent of Article 2(1) of Council Decision 98/415/EC of 

29 June 1998  on  the  consultation  of  the  European  Central  Bank  by  national  authorities  regarding  draft 
legislative provisions1, as the draft regulation relates to rules applicable to financial institutions insofar as 

they  materially  influence  the  stability  of  financial  institutions  and  markets.  In  accordance  with  the  first 

sentence of Article 17.5 of the Rules of Procedure of the European Central Bank, the Governing Council 

has adopted this opinion. 

1.  

Purpose of the draft regulation 

1.1  The  main  purpose  of  the  draft  regulation  is  to  ensure  the  implementation  of  some  sections2  of 

Recommendation  ESRB/2011/1  of  the  European  Systemic  Risk  Board  of  21  September  2011  on 
lending  in  foreign  currencies3.  To  this  end,  it  amends  and  supplements  BNR  Regulation 
No 24/2011 on granting loans to individuals4, which provides requirements in relation to lending to 

individuals  in  a  foreign  currency,  and  the  creditworthiness  of  a  borrower  and  its  capacity  to 

withstand  adverse  shocks  due  to  exchange  and  interest  rate  movements.  In  respect  of  BNR 

Regulation  No  24/2011,  the  ECB  has  previously  issued  Opinion  CON/2011/74  on  lending  to 
natural  persons5.  The  draft  regulation  also  clarifies  some  of  the  existing  provisions.  The  draft 

regulation is scheduled to enter into force on 1 January 2013, when BNR Regulation No 24/2011 

will be repealed. 

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2  
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4  
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OJ L 189, 3.7.1998, p. 42. 
Sections A.1, B.2, B.3 and G. 
OJ C 342, 22.11.2011, p. 1. 
Monitorul Oficial al României, Part One, No 767, 31.10.2011. 
All ECB opinions are published on the ECB’s website at www.ecb.europa.eu. 

 
 
 
 
                                                 
ECB-PUBLIC 

1.2  The main amendments in the draft regulation aim to: (a) improve the current foreign currency risk 

awareness mechanisms so that they are aligned with Recommendation ESRB/2011/1, and (b) add 

requirements in relation to lending to non-financial entities in a foreign currency: 

(a)  

creditors offering foreign currency loans must inform unhedged clients, both individuals and 

non-financial entities, applying for such loans about the negative effect on repayments of a 

severe depreciation of the national currency and, for loans with variable interest rates, about 

the  negative  effect  of  a  severe  depreciation  of  the  national  currency  associated  with  an 

increase in interest rates; 

(b)  

creditors must establish internal eligibility criteria for the granting of foreign currency loans. 

Such criteria must ensure that unhedged non-financial entities would be eligible for foreign 

currency loans only if they demonstrate their repayment ability even in the event of a severe 

currency depreciation associated with an increase in interest rates; 

(c)  

creditors must ensure that conditions for the granting and guaranteeing of foreign currency 

loans to unhedged non-financial entities are stricter than those applicable to the granting of 

similar products in the national currency; 

(d)  

creditors that are Romanian legal persons and conduct lending activities in another Member 

State,  either  through  a  branch  or  by  the  provision  of  services,  must  comply  with  the 

requirements for foreign currency lending to unhedged clients in force in the Member State 

in which the branch is situated, or in which the services are provided. 

2. 

General observations  

2.1  The ECB welcomes the draft regulation, which is aimed at promoting responsible lending by credit 

institutions,  including  in  the  area  of  foreign  currency  lending,  as  well  as  enhancing  market 

discipline. The ECB has assessed the draft regulation also taking into account the documentation 

for  the  consultation  procedure  which  resulted  in  Opinion  CON/2011/74.  The  ECB  reiterates  the 

observations made in that opinion. 

2.2  The draft regulation only implements some sections of Recommendation ESRB/2011/1. The ECB 

is  of  the  view  that  implementation  of  all  elements  of  Recommendation  ESRB/2011/1  should  be 

considered. 

2.3  The  ECB  notes  in  this  regard  that  the  assessment  of  the  compliance  of  the  draft  regulation  with 

Recommendation ESRB/2011/1 will be undertaken by the European Systemic Risk Board.  

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ECB-PUBLIC 

This opinion will be published on the ECB’s website.  

Done at Frankfurt am Main, 7 December 2012. 

[signed] 

The President of the ECB 

Mario DRAGHI 

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