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January 21, 2022

Romania might suffer from unfavorable developments in Greece

Four of the banks that have the largest exposure to Greece’s sovereign debt have a presence in Romania too. The strong financial and trade ties that Bucharest has with Western European states expose the country to the escalation of the debt crisis in the Euro Zone. “Romania is one of the countries that would stand to suffer from unfavorable developments in Greece. The financial sector is the first direct channel through which these shocks can be transmitted,” ING Chief Economist Nicolaie Alexandru-Chidesciuc, stated for ‘Adevarul’ daily.

The National Bank of Greece (NBG), present in Romania through Banca Romaneasca, has the largest exposure to Greece’s sovereign debt (EUR 19.8 bln), followed by Piraeus Bank (EUR 8.3 bln), EFG Eurbank (present in Romania through Bancpost, EUR 7.5 bln) and Alpha Bank (EUR 5.1 bln). The data is for 2010 and their source is the Committee of European Banking Supervisors (CEBS), the current European Banking Authority (EBA).

Apart from Greek banks, another five European financial institutions that have subsidiaries in Romania have invested in Greece’s debt by buying state bonds. In this case, the Western parent-banks, pressed by financing needs, may rethink their exposure in Romania, lowering their financial support or even withdrawing money from their subsidiaries. “Greece will restructure its debt. It’s inevitable. And the ones losing from this restructuring are its creditors: German, French, British banks, the ECB and others,” analyst Liviu Voinea, executive director of the Group of Applied Economics, believes.

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