Moodyaa‚¬a„¢s gives Romanian banking sector negative outlook

The fundamental credit outlook for Romania’s banking sector is negative, reflecting the challenging conditions in the local economy stemming from the global financial crisis, according to Moody’s. However, the ratings agency noted that, so far, despite their heightened risk profile, local banks have been able to absorb the various shocks, while the IMF/EU support package has alleviated the macroeconomic pressures. The vast majority of Romanian banks are part of larger European banking groups that provide their Romanian subsidiaries with most of their wholesale funding.

Moody’s negative outlook for the Romanian banking system expresses the ratings agency’s view on the likely future direction of fundamental credit conditions in the industry over the next 12 to 18 months. It does not represent a projection of rating upgrades versus downgrades, the agency said. Moody’s acknowledged that, despite the weakened conditions, the EUR 20 billion IMF/EU support package put in place during 2009 and the newly elected Romanian government’s commitment to economic reforms have eased not only the macroeconomic pressures but also any significant concerns regarding the liquidity and solvency of the local banking system.

Staff

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