In the last few days, the representatives of two banking groups have announced capital increases for the Romanian operations.
The CEO of Erste Group Bank, Andreas Treichl, announced during a press conference that BCR will benefit from an injection of capital by the end of this year. More precisely, the total increase of capital will be approximately EUR 100 million. Erste Group will partially write down its Romanian-related goodwill by EUR 700 million pre-tax to reflect the slower than expected economic recovery. Following a successful boyout of the SIF minority shareholders, the remaining goodwill will be supported by a substantially large share of BCR’s cash flow. These measures were announced in an official press statement. However, BCR representatives in Bucharest refrained from commenting Treichl’s statement on the additional capitalization of the bank.
Erste Group cut its sovereign exposure to Greece, Portugal, Spain, Ireland and Italy from EUR 1.9 billion at year-end 2010 to EUR 0.6 billion at 30 September 2011. As a result of these extraordinary changes, the Erste Group expects to post a net loss of about EUR 700-800 million. Before these decisions, the group was expecting a net profit of EUR 850-950 million this year. Its solvency rate will remain unchanged at 9.2 percent, well established in the Core Tier 1 ratio.
Volksbank will also benefit from a capital injection of EUR 100 to 200 million this year, or early next year, according to Johann Lurf, President of the Directorate at Volksbank Romania. The lender will boost its solvency rate that currently stands at 12 percent, added Lurf. Volksbank reported a net profit of EUR 1.3 million at end-August.