The current exceptional times we live in have shown us that no business sector has remained unaffected.
The exceptional times we live in have shown us that no sector has remained unaffected.
The current exceptional times we live in have shown us that no business sector has remained unaffected, including the financial sector which during this period has been both a source of strength — with banks supporting businesses and households — and also an area of potential risk, because of concern around credit losses. All efforts are now being concentrated to overcome the health crisis and at the same time to mitigate the effects of the economic crisis, bearing in mind the lessons learned from 2008. The main difference compared to the last economic crisis is that the financial sector, and its regulators, are much more resilient, better prepared and also have previous experience in dealing with shocks to the economy.
Measures such as the possibility to defer bank credit installments until the end of 2020, and the suspension of foreclosure procedures until September 2020, have come as a breath of fresh air for Romanian companies and individuals facing financial difficulties, but these must be correlated with the financial facilities for banks as well — such as the banking package proposed by the European Commission at the end of April 2020 to support credit institutions which have needed to reconsider the level of their expected credit losses during these times. It is important, however, to acknowledge that these support measures are not ultimately intended to help banks become more profitable, but to improve their capability to provide companies and households with much needed financing in order to avoid bankruptcy, while still maintaining the continued resilience of the banking sector.
© 2020 KPMG Romania S.R.L., a Romanian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity.
KPMG International Cooperative (“KPMG International”) is a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm.