Banks have frozen loans exceeding €100 million

“Any major loan is difficult to finance because of a lack of funds. There are still ongoing negotiations, but the chances of striking a deal are less than 50 percent,” Florin Ilie, Head of Equity Markets of ING Bank NV, Bucharest branch, told Business Standard. The lending freeze is due to a long-term lack of funds, as mother-banks, which until recently provided 90 percent of the funds for Romanian lenders, have turned off the tap. Large and long-term foreign currency loans were most affected by this decision. “All large transactions on the market are on stand-by. We are in a situation in which we have no relation to the market. We cannot assume any responsibility until we have a new government. Banks are no longer financing their Romanian subsidiaries due to the international crisis,” said a top management source of one of the first five players in the banking system. Bankers hope that the current situation affecting lenders will improve in 2009, although there are companies on the market, such as Complexul Energetic Turceni and Hidroelectrica, which are waiting to sign loan agreements, even at higher costs. Financing for Romania has become much more difficult, after the country was downgraded twice by rating agencies, even if the funds are granted on a short-term by the mother-bank. Moreover, lenders are paying closer attention to loan collaterals. The alternative is attracting local resources, but the foreign currency situation cannot be replaced by local foreign currency deposits. (G.F.)