Implications for the banking sector in Romania…

from the EU decision on Greece. In Romania the main question in the last few days had to do with foreign bank’s exposure. Will it remain at the current level or not after the EU decision on Greece?

This is what the statement says, highlights are my own.:

“Financing of capital increase: Banks should first use private sources of capital, including
through restructuring and conversion of debt to equity instruments. Banks should be subject to
constraints regarding the distribution of dividends and bonus payments until the target has
been attained. If necessary, national governments should provide support , and if this support
is not available, recapitalisation should be funded via a loan from the EFSF in the case of
Eurozone countries.”

It does look to me that through private sources of capital and restructuring the exposure to Romania might be reduced. However, one thing is sure, do not expect banks to increase their exposure (could even hurt RON financing of the deficit) or to support the next phase of growth in Romania. This burden will be left to the Romanian consumer.

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