Warnings for Romanian banking system in 2012

“Romania will have to be catching in 2012 and to propose bankable business”, analyst Lucian Anghel said, in the fourteenth edition of the Romanian Banking Forum.

The contracts signed by the Minister of Transport show the lending increase in 2012.

Romania will find financing for major projects, but the other projects are in danger.

Credit balance will remain constant in 2012 and will record a slight increase.

Unfortunately, Romania depends on the savings achieved by other states, as it currently has an external debt of 100 billion euros.

The cost of risk came to 4.8 percent, compared with 1.8 percent, as it was in 2008. This means an annual loss to Romania of almost 3 billion euro of additional financing costs.

Our country needs to reduce dependence on the savings of other states, it could not tax the interest on deposits or to encourage pension funds, it could use the capital market.

European funds are important and it is essential to be oriented towards domains that generate added value.

Cezar Furtună, KPMG analyst, claims that the European banks and hence the Romanian ones will focus on recapitalisation required by the European Central Bank and the money will not redirect to the real economy.

Non-performing loans remain a problem for banks and market prices are low, which mean weak revenues performance.

The KPMG analyst said that we might watch the movements on financial-banking markets; the lack of liquidity in financial markets and the banks refocusing on domestic markets bring about a battle between the local banks for internal resources.

There were interventions of the CEC Bank and Eximbank representatives and there were presented new strategies to attract resources. The guarantee and counter credit funds did not miss from the Romanian Banking Forum.

State debt crisis of the euro area is likely to affect banking system in Romania

“Romania's banking system is likely to be severely affected by the debt crisis in the euro area and the state funding crisis experienced by European banks”, Moody's rating agency warns.

Crisis could lead to lower lending, deterioration of asset quality, capital increase and pressure losses.

“Bad loans will increase if the lion depreciates, since most borrowers in foreign currency have revenues in local currency”, Moody's argues.

The risk of parent banks in Western Europe to reduce their operations in Romania is growing, the report of the Agency continues, a situation that would affect the local banking capital and stop the lending growth.

Moreover, Moody's confirmed on Monday its intention to downgrade in the first quarter of next year, countries across the European Union.

Even the most stable countries, such as Germany, Holland, Austria or Finland would not be exempted.

Translated by: Iulia Florescu
MA Student, MTTLC, Bucharest University