Greek and Dutch Banks Withdrew EUR3 Billion from Romania In 2010

05.06.2011 ZF English

The exposures of Greek and Dutch banks to Romania fell by nearly EUR3 billion last year compared with 2009, according to data published by the Bank of International Settlements (BIS).

In the case of Greek banks, exposure to Romania fell by EUR1.6 billion, to EUR15.8 billion, while for banks in the Netherlands exposure was reduced by EUR1.1 billion, to EUR5.2 billion.

The Greek now hold 16-17% of the assets in the Romanian banking system, and problems in their own country, which faces a crisis so tough it has shaken the entire euro zone, are making it much more difficult for Romanian operations to finance their activities through loans. Last year, Greek banks kept pressure up on deposit interests and implicitly on loan interests, paying interests above the market average in order to finance their operations preponderantly from the local market.

Alpha Bank and Bancpost (the subsidiary of EFG Eurobank) are in the top ten players, but there are six banks with Greek shareholders operating on the Romanian market. Dutch banks are represented on the Romanian market by ING, but there are further lending institutions with local exposure, including to T-bills.

"Banks' exposures have remained relatively stable in crisis. More money will continue to flow in if demand for foreign-currency loans returns. Foreign banks' exposure rose very much when lending rose significantly, before the crisis. Financing from parent banks will grow if financing needs grow," commented Ionut Dumitru, chief economist of Raiffeisen Bank.

During the crisis, after more than a year of looking closely at the exposures of the nine main foreign banks in Romania, seeking to persuade them to keep their exposures, the International Monetary Fund, the European Commission and the National Bank agreed at the end of July 2010 to a 5% cut to the exposure recorded at the end of March 2009. This spring they decided to allow banks to freely increase or reduce their exposures to Romania, based on their own evaluations and interests.