Foreign banks exposure in Romania down by EUR 2.1 bln in 4 months

Newsroom 04/07/2012 | 09:59

The total exposure of the nine largest foreign banks active in Romania fell by EUR 2.1 billion by end-April to 94.8 percent, from 101.3 percent at the end of 2011, says the IMF in the fifth review mission report with Romania.

Around 83 percent of the banking assets in Romania are owned by private capital, including local subsidiaries of foreign banks and this makes it vulnerable to parent funding losses. This is especially the case for parents in the euro zone periphery.

More than half of the foreign stakes in Romanian credit institutions come from Greece, Austria and the Netherlands. This amounts to RON 10 billion ( EUR 2.2 billion), while the overall foreign equity in the Romanian banking system stood at RON 14.4 billion (EUR 3.2 billion) at end-2011, according to the National Bank of Romania (NBR).

The aggregate net asset value of the banking system grew by 2/7 percent y/y to EUR 81.8 billion. The capitalization of the banking sector remained solid at 14.3 percent at end-March. In the same time, the share capital of banks grew by 7.9 percent in nominal terms and by 4.7 percent in real terms, according to the NBR.

Lending to the private sector was up by 6.6 percent last year to RON 223 billion (EUR 50 billion), fueled by a 10.3 growth in the corporate sector and a meager 2.1 increase in households. Loans in foreign currency went up by 7.2 percent amounting to 63.4 percent of the private sector lending. Meanwhile, loans in the domestic currency RON moved up by 5.6 percent.

The loan to depots ratio moved up by 3 percent to 116.6 percent last year.

The nonperforming loan ratio (NPL) ratio rose to 15.9 percent in March  compared to 14.3 percent at the end of 2011, but banking provisions cover 99 percent of the NPLs, while the new IFRS provisioning stood at 68.4 percent, considered comfortable by the IMF.

The largest foreign banks in Romania after total banking assets were BCR, BRD Groupe Societe Generale and Raiffeisen with 20.1 percent, 13.6 percent and 6.7 percent. UniCredit Tiriac and Volksbank Romania owned 6.4 percent, respectively 5 percent of the banking assets.

State-owned CEC Bank and Eximbank own 7 percent and 1.2 percent of the assets.

Ovidiu Posirca

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