Bank executives in Romania expect more job cuts, says KPMG survey

Eighty-two percent of banks in Romania have slashed jobs or plant to do so, in a bid to cut operating expenses, following a pattern registered in Austrian and Hungarian banks, according to a banking executive survey carried out by the professional services firm KPMG.

The surveyed banks seem to have dropped key investments that aim a long term growth, focusing instead on cost-cutting measures, according to Cezar Furtuna (in picture), partner, financial services at KPMG Romania.

“Measures currently being taken by a majority of banks include steps to increase the efficiency of internal operations and IT solutions to reduce operating expenses. Banks also plan to implement or increase the use of outsourcing and get rid of unprofitable or less key business activities,” said Furtuna.

Serban Toader, senior partner at KPMG Romania, said Romanian banks have hoped on the restructuring bandwagon in the past two years and cleaned their portfolio of underperforming assets. He added that delaying long-term investment plans may see lenders start experiencing “the adverse effects of overlooking the future of the business”.

Furtuna added the banking sector is facing lackluster growth rates after upgrading the risk management policies.

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“The banks were used to being able to grow at a very fast rate by granting loans and accepting segments of customers which would not be suitable for the current risk management standards”, stated Furtuna.

Around two-thirds of Romanian loans are in foreign exchange and the loan-to-deposit ratio has stabilized at 111 percent.

More than half of the surveyed bankers described 2012 as worse that last year and expect the same situation this year. However, executives in Romania, Austria, the Czech Republic and Hungary are more optimistic.

The KMPG report stated the Romanian banking sector is quite stable, although it registered minor losses for two years. Lenders have taken a cautious approach and propped up the provisioning and liquidity levels and the National Bank of Romania kept a tight grip on the system, according to KMPG.

Executives in Romania mentioned the monetary policy and the improved consumer confidence as factors that determine the financial performance of banks. Many lenders in Romania said that long-term funding is one of their biggest future challenges.

The KPMG survey involved the top management of more than 100 banks in Austria, the Czech Republic, Hungary, Poland, Romania and Slovakia.

Ovidiu Posirca