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April 21, 2021

BNR: Banking system stays on a stable trend

According to Central Bank Governor Mugur Isarescu, Romania needs strong and healthy  competitors, able to combat the tough costs of the crisis years.

Romania gradually consolidates its way out of recession, as banks restart the engine of the crediting process. The representatives of the International Monetary Fund (IMF) and economic analysts share the opinion that any growth percentage stimulates confidence.

The banking system is stable and, at least in 2012, there will be no situation that would make it necessary to set up a “bridge bank,” the Director of the National Bank of Romania’s Surveillance Department, Nicolae Cinteza said last week, during a banking seminar held in Sinaia. According to the BNR official, solving the problem of a bank implies dealing with the problems of all its creditors. “The solvency indicator is at a level that is comfortable enough, at 13.5 pc. At this moment, there is no problem posed by Greek or Austrian banks. At least at the level of the Surveillance Department, in terms of prudence indicators, we have no problem at all. We are very closely monitoring the possible influences from abroad, but I believe that the biggest problem which exists now, apart from the external one, is the problem we are making ourselves,” Cinteza emphasised.

In his turn, Central Bank Governor Mugur Isarescu considers that, in order to have a better stability in this moment, when global economy is still fragile, Romania needs strong and healthy competitors, able to combat the costs, to know how to do this, and to cut the costs transferred upon customers. According to the BNR official, the Romanian banking system will gain the characteristics of the European system to an even greater extent, regarding Romania’s situation in the context of the new fiscal accord reached by Europe.In his turn, the first deputy governor of BNR, Florin Georgescu said that setting up a bridge bank or the participation of the Bank Deposit Guarantee Fund in the shareholding structure of a bank with problems will only be applicable to the credit institutions that pose a threat to financial stability. “(…) Even if, in 2010 and during the three quarters of 2011, in the conditions of the shocks caused by the global crisis, some banks registered losses of more than RON 1.3 bln, we will notice that the banking system still achieved a net gain over RON 15 bln (about EUR 3.5 bln). We must admit this is a good result,” Georgescu added. The Romanian banking system is in no danger, he added. “It is however a remarkable fact that the net losses registered by some banks are not so high as to endanger the banking system as a whole, or any specific bank. We also owe this to the National Bank, which has never abdicated from a golden rule: keeping the regulation and surveillance system connected to the requirements of securing the financial stability,” the first deputy governor of BNR explained. If, today, Romania must fight only the economic crisis, without being also hit by financial crisis, the result was achieved in the conditions of an efficient correlation between the monetary policy and the regulation and surveillance policies, Florin Georgescu considers.

According to BNR chief-economist Valentin Lazea, “the Romanian banking system will be more careful with granting loans, and competition over taking loans will be much tougher, so only the best of the best will be able to take a bank loan.” Until then, Romania will have to be attractive in 2012 and to propose bankable businesses, economic analysts believe.

The role of the bridge bank

BNR currently can instate the special management regime upon a bank with financial problems, or approve the takeover of assets and assumption of liabilities by another bank, thought as having a sound financial situation. Under a draft regulation conceived by BNR and promoted by the Ministry of Public Finance, the bridge bank represents a credit institution created and operated as a bank, with the purpose of taking over the assets and liabilities of a credit institution, in order to make sure that the banking services which correspond to the transferred assets and liabilities will remain operational, and the bank will be later sold to an eligible third party. The bridge bank is constituted and operates for two years at most, with the possibility of extending the interval by decision of BNR, if there is the persistent risk of a threat to financial stability and/or if negotiations with the potential buyer of the bridge bank have not been finalised.

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