Executive summary4

Macro Outlook5

GDP up by 2.9% y/y in Jan-Sep 2014.5

Industrial output marginally up in November, exports also lose momentum.5

B. Relationship with IFIs7

PM Ponta says Romania might opt for flexible credit line with IMF, after completing SBA in 2015.7

C. Monetary Policy7

Central bank cuts policy interest rate by 25bp to 2.5% in January - rate is already 1.25pp down y/y7

Romania's currency weakens against euro during H2.8


CHF strengthening no risk to Romanian banking system stability - c-bank.9

Large share of forex loans affects Romania's banking system.9

Government endorses personal bankruptcy draft bill.10

Largest bank BCR warns against forex loan conversion bill.10

Moody's welcomes Romania's plans to adjust covered bonds regulations.11

BIS-reporting banks increase exposure to Romanian banking system in Q2.11

A.Top Stories15

Romanian banking system's losses seen hitting 0.66% of assets in 2014.15

B. Loans & Deposits16

Bank lending slightly gains ground.16

Deposit base of banks keeps rising, by 6.2% y/y in euros as of end-Nov.17

C. Bank Loan Quality21

Cleaning of banks' balance sheets loses momentum in Oct-Nov.21

D. Corporate News23

Romania's BCR, Bank of Cyprus to sell combined portfolios of EUR1bn, mostly bad loans - report.23

Romania's largest bank BCR reportedly sells EUR443mn bad loans bundle.23

Volksbank Romania seeks compromise with CHF loan holders - sources.23

Banca Transilvania signs deal to take over troubled Volksbank Romania.24

Fitch places Romanian Bank Transilvania under rating watch on planned takeover.24

Carpatica shareholders refuse merger with Nextebank.25

Fitch affirms rating of Romania's BCR, BRD and Garanti banks.25

Banca Transilvania receives EUR150mn financing from EIB.26

EBRD issues five-year bonds denominated in Romanian currency.26

Bucharest municipality to issue EUR500mn local currency bond.26

INTERNAL STABILITY Public Finance, Inflation27

Headline inflation eases inm December to 0.83% y/y on lower fuel prices.27

Yield of 10-year bond down by 41bp since December, to 3.28%.28

Budget deficit hits 1.98% of GDP in 2014, tio further narrow in 2015.28

Romania issues EUR1.5bn of 10-yr Eurobonds.29


C/A gap narrows by 62% y/y to some 0.2% of GDP in Jan-Nov.31

Appendix: Previous issue's Content33

Table 1: GDP in Jan-Sep, countribution of sectors and dynamics per sector6

Table 2: Deleveraging and BIS-banks' exposure to CESEE countries13

Table 3: Selected performance indicators for Romanian banking system16

Table 4: Bank loans [RON mn]16

Table 5: Bank deposits [RON mn]18

Table 6: Stock of bank* loans to private sector - detailed (end November 2014)19

Table 7: Stock of bank* deposits from private sector - detailed (end November 2014)19

Table 8: Bank loans by quality21

Table 9: Overdue payments on bank loans [EUR mn, % of total loans]22

Table 10: Credit quality indicators [RON mn, unless indicated]22

Table 11: Budget execution29

Table 12: Public Debt [eop, EU methodology not including borrowing from own reserves funds]30

Table 13: Public Debt [eop, national methodology including borrowing from own reserves funds]30

Table 14: Current Account, ytd [EUR mn, BPM6]32

Table 15: Gross External Debt [EUR mn, BPM6]32

Figure 1: Seasonally adjusted GDP [plus y/y for non-adj. GDP]5

Figure 2: Main drivers of GDP y/y growth - by elements [pps]6

Figure 3: Main interest rates [%]7

Figure 4: Romania's currency nominal and real exchange rate against EUR[latest month in the charts is August].8

Figure 5: Quarterly inflows/outflows generated by deleveraging vs. local banking system14

Figure 6: Net profit of banking system, quarterly [EUR mn]15

Figure 7: Stock of credit, by debtor [EUR mn]17

Figure 8: Dynamics of the corporate loans by currency - forex, local currency [EUR mn, RON mn]17

Figure 9: Non government's deposits [EUR bn]18

Figure 10: Deposits in Romanian banks, term vs. sight18

Figure 11: Non government sector's net balance with banks19

Figure 12: Net balance with banks, by sector19

Figure 13: The change in the stock of bank loans [EUR mn, not adjusted to effects of the exchange rate variations]20

Figure 14: The change in the stock of bank loans [RON mn, not adjusted to effects of the exchange rate variations]20

Figure 15: Bad loans, off-balance sheet loans [RON mn]21

Figure 16: NPL ratio [new, old methodology]22

Figure 17: Overdue payments on bank loans [EUR mn]22

Figure 18: CPI vs. HICP [y/y]28

Figure 19: Gross External Debt [EUR mn]33