CDS growth to 4.8 pc entails costs of EUR 3 bln for Romania, BCR chief economist Lucian Anghel warns.
National Bank of Romania (BNR) Governor Mugur Isarescu stated during an banking forum that one can say we are at the end of a 40-year cycle and that personally he is embarrassed to utter the word “crisis,” capital.ro informs. Isarescu also talked about the Romanian financial-banking system’s outlook in the European context, underlining that the system will be endowed in an even greater measure with the features of the European system. The governor added that weak competition within the financial-banking system allows the banks to “transfer” on the clients’ shoulders the costs of their inefficient organization and of their erroneous risk assessments, adding that this is not a question of the players’ number but of their strength. Likewise, Isarescu expressed his indignation towards the banks that transferred on their clients’ shoulders the costs of bad loans, the latter being mainly the result of poor risk analysis, according to Mediafax.
In his turn, Banca Comerciala Romana (BCR) chief economist Lucian Anghel stated yesterday at the same forum organized by BNR, that the bank’s representatives estimate that Romania will register an economic growth of 1.2 per cent in 2012 against the backdrop of good internal demand. Lucian Anghel added that drawing EUR 6 bln in European funds next year would mean an extra percentage point.
Likewise, BCR’s chief economist also stated that given Romania’s external debt of approximately EUR 100 bln, the credit default swap’s (CDS) hike from 1.8 per cent in 2008 to 4.8 per cent now entails costs of EUR 3 bln, cotidianul.ro informs. Anghel pointed out that this is a crucial moment for Romania to try and risk, in the next 5 or 10 years, measures that would lower its dependence on other countries’ savings. Likewise, BCR’s chief economist stated that if Romania implements all measures included in its agreement with the IMF then our CDS may drop.
BCR: credit balance to register modest 2-5 pc growth
On the other hand, chief economist Lucian Anghel added that next year the credit balance will either remain at a constant level or will register a very modest growth of 2-5 per cent, money.ro notes. “It has to be seen what happens with the other financings and how the interest rates for them evolve, given the fact that there is this international pressure,” Lucian Anghel stated.
He also stated that negotiations on the Basel III agreement lasted approximately three and a half years and will be implemented in 2018-2019, hence a very long time, in order for the banks to be prepared to fulfil the capital requirement of 8 per cent. “Thus, the top priority for the banking system will be to bring the moderate-risk assets down to European levels,” the chief economist also explained.
He continued by saying that European banks are present on many markets, not only on the Romanian one, so capital earmarking priorities will go to the best-performing, most profitable markets. Anghel claims that, in these conditions, Romania will be forced to remain attractive.
At the same time, Anghel noted the fact that if one considers the contracts signed by the Transportation Ministry then one can hope we will register a growth in crediting next year at least on this segment. BCR’s chief economist also pointed out that the bank is financing approximately 40 per cent of the works on Corridor IV and believes that Romania finds itself unable to find financing for major infrastructure projects.
In his turn, CEC Bank President Radu Gratian announced at the same forum that 15 per cent of the credits offered by the bank are bad, pointing out however that instead of foreclosure he would prefer negotiating credit restructuring, ‘Adevarul’ daily informs. Radu Gratian added that he has prepared a new crediting product that consists of a RON-denominated housing loan at an interest rate of just 5.97 per cent per year and DAE of 8.74 per cent.
KPMG: some foreign banks may leave Romania in 2012
Several foreign banks may leave Romania next year because their parent banks do not back their activities on the local financial-banking market, Cezar Furtuna, KPMG Romania and Moldova partner, stated yesterday at the Romanian Banking Forum, ‘Capital’ daily informs. “The distribution of dividends from Romania to parent banks is less likely to take place next year. (…) The big banks have no intention of leaving, but there are 40 banks in Romania and not all enjoy the backing of their parent banks,” the KPMG representative stated. Likewise, he pointed out that 2012 will see the restructuring of the banks’ distribution networks.