Banks with foreign majority stakeholders dominate the Romanian banking sector, representing over 90 per cent of the gross banking assets registered at the end of December 2014, according to the National Bank of Romania’s (BNR) 2014 annual report.
“The size of the Romanian banking sector remains relatively low compared to other EU member states. Thus, the degree of financial leverage, calculated as the gross banking assets’ GDP share (60.8 per cent in 2014) continues to be far below the EU-28 average, against the backdrop in which the crediting activity lags behind. Banks with foreign majority stakeholders dominate the Romanian banking market (over 90 per cent of the gross banking assets registered at the end of December 2014), the highest market shares being registered by banks with Austrian capital (36.7 per cent), French capital (13.3 per cent) and Greek capital (12.4 per cent),” the report reads.
According to the BNR, at the aggregate level the volume of gross banking assets dropped by RON 3.4 bln to RON 405.3 bln in 2014. The dynamic was influenced by a small number of foreign capital banks that hold a significant market share in the local banking sector; balance sheet adjustments operated by these banks against the backdrop of the need to improve operational efficiency were more ample than the organic growth registered by other banks that intensified their crediting activity during this period.
BNR also shows that, from the point of view of the structure of debtors the banking sector registered growth in the banks’ exposures to the public sector, the share of these exposures in the total banking assets reaching 21.1 per cent, being superior to the average level registered by EU banks.
“In the following period, the attractiveness of these investments may diminish, bearing in mind the gradual introduction of a capital requirement for this class of exposures as well as the initiative formulated at the European Commission level in what concerns the manner of regulating sovereign exposures, in the sense of excluding them from the exceptions to the large exposures regime and introducing a capital requirement for concentration risk,” the report reads.
Likewise, the growth of external investments from RON 12.1 bln in December 2013 to RON 19 bln in December 2014 was noticed particularly in the case of Euro Zone banks, for periods of up to a year, their share remaining however marginal in the balance sheet assets, at 4.7 per cent in December 2014.