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May 15, 2021

Capital flees from Romanian banks

Under this headline, the ‘Romania Libera’ daily emphasizes that the foreign banking groups’ exposure on Romania is dwindling by the year. The dramatic situation in Greece is raising a big question mark about the future of certain local banking institutions.

The credit lines offered by the parent banks of Romanian subsidiaries have continued to drop last year too. The groups’ exposure dropped by 16 per cent and BNR, despite stating that these are orderly movements, admits that we are witnessing a significant process of deleveraging. Foreign banking groups continue to gradually lower their exposure on Romania. Last year the drop stood at 16 per cent, confirming a trend that started as early as 2010. “Cross-border financial deleveraging grew throughout the year, but maintained its orderly character. The parent banks’ exposure to their Romanian subsidiaries dropped by approximately 16 per cent in 2014. On the other hand, the deposits attracted on the local market – the banks’ main source of financing – maintained their upward trend (+7.3 per cent, real variation), a development that, corroborated with the drop in corporate loans, has led to a new drop in the loan-to-deposit ratio, down to a level that no longer generates pressures from a macroprudential standpoint (90.5 per cent at the end of 2014),” the National Bank of Romania (BNR) shows in its annual report, ‘Romania Libera’ informs.

On the other hand, the same document reveals that the Romanian banking system’s dependence on capital from parent groups continues to rise. Over 90 per cent of the Romanian banks’ total assets are held by groups from Austria, France and Greece.

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