The solvency of large banks in Romania increased between June 2012 and June 2013, while the situation of medium-sized and small banks deteriorated, finds the 2013 Financial Stability Report of the National Bank of Romania (BNR). The Central Bank classifies as large credit institutions those whose assets account for more than 5 pc of the banking system, medium banks are those between 1 and 5 pc and small banks are under 1 pc. The solvency index of large banks advanced by 0.5 pc during the interval under analysis, to 13.4 pc at the middle of this year, finds a BNR analysis. On the other hand, in the case of small and medium banks, the indicator was on a downward trend during the interval, against the background of negative financial results that affected the volume of own funds, but was still above the average of the banking system, of 14.67 pc, mentions the report.
In terms of financial distribution of banks depending on the level of the solvency ratio, the biggest group, with 14 credit institutions, is the one that includes the 12 pc – 16 pc interval, reads the document issued by the Central Bank. Five banks had a solvency index between 12 pc and 16 pc, five others between 16 pc and 20 pc and a third group above 30 pc, according to BNR. “Only one small bank (less than 0.12 pc of the banking system’s assets) had a solvency level under 10 pc at the end of June 2013 (but this was above the regulated minimum limit of 8 pc), and it was subject to measures of supervision,” explains the document. The number of credit institutions with a solvency index above 16 pc – high, according to BNR – diminished to 11 at the middle of this year, from 17 in the similar interval of last year, mentions the 2013 Financial Stability Report.
From the perspective of the lever effect, representing the ratio between the own funds of 1st level and the total of bank assets at average value, large banks maintained their indicator slightly under the 8.2 pc system average in March, finds the report. Medium-sized banks were one percent point above the average, while small credit institutions went down between March 2012 and March 2013, to approximately 7 pc at the end of the interval, driven by the negative financial results obtained last year and in the first half of 2013, BNR informs. The latest stress test conducted by the Central Bank shows that solvency throughout the banking system might diminish by four percent points, to 10.8 pc in 2015, against the background of the devaluation of the RON by more than 20 pc and a negative economic growth in the coming years, but only few small banks would need extra capital, adds the report.