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Romania Banking Report - Q4, 2014

  • January 2015
  • -
  • Emerging Markets Direct Media Holdings
  • -
  • 34 pages

Summary

Table of Contents

This report covers the market developments and statistics data released up to mid-January 201 - including short-term series as of Q3, 2014 and partly Oct-Nov 2014. Region-level aggregated data from BIS is available as of Q2.



Romania's banks took significant steps toward cleaning their balance sheets since April 2014 and the NPL has consequently dropped by 5.1pp to 15.3% at the end of September. This was also visible in banking system's profitability -- EUR409mn losses in Q3, compared to EUR79.7bn at the end of the quarter. Banks have apparently stopped the process in October-November, as indicated by the NPL ratio and the structure of loans by quality. At the end of November, central bank warned banks claiming that they have delayed in following the balance sheet process. Some banks might be banned the right to take deposits, central bank warned at that time - but nothing happened meanwhile in this regard. The central bank said banking system would end 2014 with EUR510mn losses (from EUR363mn in Jan-Sep) but the slower bad loans resolution might result in smaller losses however.



On the upside, the banks seem to have strengthened lending during H2, 2014 - even if the process remains weak. Central bank's monetary policy rate cuts brought the interest rate down but consumer and investor confidence remain low to moderate. The overall volume of bank loans has declined, and is expected to continue declining for some time, as banks are writing off large volumes of bad loans from their balance sheets.



Romania's Banca Transilvania has signed a firm agreement to purchase 100% of Volksbank Romania from its shareholders - Osterreichische Volksbanken AG, Groupe BPCE, DZ BANK AG and WGZ BANK AG. Banca Transilvania will pay some EUR600mn of the total amount of EUR1.6bn invested by Volksbank Romania's shareholders as capital, credit lines and deposits, unofficial sources said.



Key points:

oC-bank cuts policy interest rate by 25bp to 2.5% in January - rate is already 1.25pp down y/y

oCHF strengthening no risk to Romanian banking system stability - c-bank

oGovernment endorses personal bankruptcy draft bill; lawmakers still debate it

oBIS-reporting banks increase exposure to Romanian banking system in Q2

oCleaning of banks' balance sheets loses momentum in Oct-Nov after sharp advance in Apr-Sep

oRomanian banking system's losses seen hitting 0.66% of assets in 2014

oBank lending slightly gains ground

oRomania's largest bank BCR reportedly sells EUR443mn bad loans bundle

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