BNR: H1 2010 to be decisive for the local banking system

“In 2010, banks will operate more layoffs and close units, and the trend will be sharper than in 2009,” said Cinteză. The official indicated that at present there are four banks that need to raise their capital in the near future, as their assets have a high risk, capitalization is unsatisfactory compared to the risk profile, and debts are too high for own assets.

“After analyzing the banks that filed for bankruptcy in Romania, I noticed three indicators that we must look at - provisions, overdue and questionable receivables, and the institution’s profit or loss,” said Cinteză.

According to BNR data, at the end of September 2009, the provisions set up by Romanian lenders amounted to nearly RON 13 billion (€3 bln), double year-on-year. “The good news is the fact that all banks accepted to raise their own funds, due to the increase in provisions. The solvency of the banking system is good, of 13.7 percent at the end of September,” the BNR representative added.

Cinteză said that lenders are affected by the large number of company insolvencies. He indicated that, in the first part of this year, a local bank plummeted to a 6.7 percent solvency from 17 percent in just three months, because the companies in the lender’s portfolio went bankrupt. He said that the RON 680 mln (some €161 mln) profit posted by local lenders at the end of this year’s first three quarters is due to the measure of cutting provisions on loans of over 90 days, by 25 percent of the value of collaterals at most.

“This is the main measure adopted in 2009. Thus, banks did not have to set up provisions for an amount of RON 2.4 billion [€0.57 bln]. The banking sector will end 2009 with a profit exceeding €200 million, if banks comply with the provision regulations,” indicated Cinteză.