Romania's regulators are adding costs for consumers by making EU directives more stringent than necessary when transposing them into local law, according to Steven van Groningen, CEO of Raiffeisen Bank SA, a subsidiary of Austria's Raiffeisen Bank International AG and one of the largest foreign lenders in the country.
So-called "gold-plating" of EU rules governing, for instance, basic bank accounts and the comparability of costs for current accounts is doing Romanian consumers a disservice, he argued in an interview with website Wall-Street.ro.
Romania adopted a law at the beginning of 2017 that banned a host of bank account fees such as those on ATM withdrawals abroad, although these measures were not explicitly required by the European directive. Banks will pass on the costs of these additional demands to consumers, van Groningen said.
"We have an EU directive with the clear purpose ... to improve financial inclusion [by giving] access to financial services to those who do not really have it. The idea was to define a set of simple products and be transparent about pricing for these products," he said in the interview published Dec. 26. "But we are again seeing a situation in which a larger package than necessary is offered for free, with the pretext of improving financial inclusion. Moreover, I have not seen any analysis that proves or explains how this measure will help financial inclusion. I believe the effect may well be the opposite."
Reluctance to use banks
In a 2015 study regarding financial inclusion, only 60% of Romania's urban population had access to a bank account, compared to about 95% across the EU, according to the Institute for Social Economy in Bucharest. Of those who participated in the study, 61% said they kept their savings at home, with affordability highlighted as the main reason for the public's reluctance to use banks.
Van Groningen also warned against a recently proposed law limiting the size of interest rates that banks may charge on loans.
"Interest rates are already very low," he said, adding that lowering them further would result in fewer people getting loans, "and this approach goes in contradiction to the previous theme, namely financial inclusion."
Van Groningen favored a central bank proposal to monitor and limit the degree of indebtedness among the population by applying "stress tests" to borrowers before issuing them with new loans.