Applying the Basel II agreement also involves higher costs for banks, which must purchase high performance IT&C systems, employ specialists, train personnel, and set up databases to comply with the new regulations. “Given the already fierce competition, the costs generated by Basel II could lead to the closure of some banks, or to their sale or merger with other lenders,” according to the President of Bancpost lender, Mihai Bogza.
Other banks admit that applying the new agreement has indeed been costly, but that the importance of stability in the banking sector exceeds that of such costs. “Basel II will provide a more efficient framework for establishing capital requirements, appropriate for a lender’s risk profile, and will raise the stability of the Romanian banking system,” according to a statement to Business Standard by the General Manager of Banca Transilvania, Robert Rekkers. The bank has allocated some €0.5 million to acquire the necessary software and train personnel involved in applying the new regulations.
