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December 8, 2022

The entire financial system must be regulated, ASF VP says

The entire financial system must be regulated, including the venture capital funds that control and make investments in the hundreds of billions, the first vice-president of the Financial Supervisory Authority (ASF), Daniel Daianu said Thursday in a debate organised by the Financial Analysts’ Association CFA Romania, referring to financial markets at global scale.
He added that the systemic risk is created by the size of cash flows and mentioned that even the investment funds that operate on the monetary market (with low risk) are demanded to have reserve capital.
According to the ASF official, in Romania, although taxpayers were not overwhelmed with monumental failures in the local financial market, the Romanian economy sustained the reverberations coming from the European economy.
“Let’s not imagine that Romanian taxpayers have not suffered because the deleveraging (the reduction of the chain of guarantees/financial disintermediation) that is going on throughout the whole Europe and which affects the financial-banking institutions in Romania is felt by the consumers of financial products in our country, i.e. what banks are doing in Romania. You don’t need a monumental failure in Romania for taxpayers to sustain the cost of these bailouts and the fact that banks have to capitalise them through their mother-groups. What mother banks do affects every branch. It is naive to believe that a big failure had to necessarily happen in our country,” Daniel Daianu explained.
In his opinion, the financial sector should be less complex and financial entities smaller.
The first vice-president of ASF also warned over the fact that regulators just begin understanding the unconventional risks, especially those related to IT.
Guaranteeing the acquisition of a minimum number of shares
Guaranteeing a minimal subscription for small investors in the offer through which the state wants to sell 51 pc of Electrica on the stock exchange will attract more investors and more cash to the capital market, considers the CEO of the Bucharest Stock Exchange (BVB), Ludwik Sobolewski, who attended the event.
“This structure (guaranteeing the purchase of a minimum number of subscribed shares) will be intelligently constructed for Electrica. Thus, one can increase the community of investors. As more cash in invested in the capital market, more people are interested by the market and the number of investors increases, the community becomes more powerful and has expectations,” Sobolewski mentioned.
He added that investors will be more involved in the capital market if they are offered opportunities, and privatisations are a way of increasing the number of investors.
Under the agreement between government and the IMF, the Electrica offer will be conducted in June. The offer in which Electrica sells on the bourse new stock representing 105 pc of the share capital will come in three installments and investors may buy shares through BVB and GDRs on the London market.

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