However, the Bank Deposit Guarantee Fund had only recovered RON 175 M from former banks by the end of last year.
The Bank Deposit Guarantee Fund (FGDB), an institution that offers compensation to clients who have deposited money to seven bankrupt banks, paid RON 512 million in compensations between 2009 and 2013. However, the Fund only managed to recover RON 175 million from the former banks by the end of last year. The banks in question are: Albina Bank, Bankcoop, the International Bank of Religions (BIR), Columna Bank, Nova Bank, the Romanian Discount Bank (BRS), and the Turkish – Romanian Bank (BTR), all of which went into bankruptcy between 1999 and 2006.
“At present, FGDB has fulfilled its compensation payment obligations to covered depositors of the bankrupt banks, as the Fund’s final obligation legally expired in January 2010. The possibility of retrieving claims and capitalizing on assets is increasingly lower, as a result of bankrupt banks being near the final stages of the liquidation activity, a fact that was confirmed by Albina Bank’s closure of the bankruptcy procedure in late 2012; it was the first bankruptcy closure of a bank in which the Fund was involved,” a press release shows. Since 1999, FGDB has legally paid RON 512,24 million in compensations to covered depositors of the seven bankrupt banks, and RON 174.9 million (34.1 percent) had been retrieved by December 31, 2013. Overall collections cashed in from five of the bankrupt banks before December 31, 2013 amounted to RON 452 million, RON 3.9 million (c. 0.9 percent) more than on December 31, 2012.
Nicolae Cinteza, head of the Supervision Directorate at the National Bank of Romania (BNR), stated at a specialized event held last month that 2014 would be a difficult year for banks, but no serious problems would emerge. He also said he expects new mergers on the domestic market, adding there still are shareholders who do not waiver from the selling price, even if they might not own sufficient funds to sustain activity. Also, market restructuring started rather late, Cinteza underlined.
In late 2009, the International Monetary Fund (IMF) included Romania in the category of countries in the region with severely reduced budget financing of over 10 percent of GDP, in addition to Hungary, Slovenia, Latvia, Lithuania, Croatia, Bulgaria, and Ukraine. Banks in these countries were characterized by significant deterioration of asset quality, low profitability, and high dependency on funding from parent banks.