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August 15, 2022

Parent-banks withdraw EUR 5 bln in one year and a half

According to Nicolae Cinteza, the director of BNR’s Supervisory Directorate, the process will grow because they demand their money bank.
The deleveraging process through which foreign banks lower their exposure on local branches is not finalized, it will actually grow because parent-banks are asking for their money back, Nicolae Cinteza, director of the National Bank of Romania’s (BNR) Supervisory Directorate, stated for ‘Ziarul Financiar.’
“In the last year and a half 25 per cent of the balance of resources attracted from parent-banks in 2011 has left. Meaning EUR 5 bln were paid back. The withdrawals of financing were compensated through the hiking of their own capital by EUR 1.7 bln, the difference set to be covered from local sources,” Cinteza said. The overall balance of the system still shows a modest 0.3 per cent growth compared to 2011, however, half-way through this year the net assets are smaller by more than 4 per cent compared to the peak registered in June 2012.
The worry shown by the director of the Supervisory Directorate is that as long as bad credits continue to rise – and he does not see a sign of that stopping – the point in which the “local source” would end up financing non-performance can be reached. “I don’t have a problem with deleveraging per se. The problem is that non-performance is still growing and there is the danger that it could be financed from the local market. If non-performance is not recognized through proper provisioning then we have a problem concerning caution.” Because of that, the BNR is monitoring the degree of coverage for bad credits with provisions in each bank. “At a low degree of coverage we will have to react, going as far as the interdiction of drawing local resources.” The system’s degree of coverage is of approximately 62 per cent, or “rather good” in Cinteza’s opinion. Banks that have a degree less than 50 per cent are being monitored.
According to zf.ro, all banks have been asked to offer the list of the top 500 debtors of restructured credits in the order of the size of exposures, the overseers looking for credits that have reached the fourth or fifth restructuring.

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