Possible frauds by Romanian dealers, 25 times lower than in France

A local dealer can risk up to €5 million per day, without needing authorization from his or her boss. Chief-dealers can risk up to €50 million, while the exposure can amount to €200 million with the authorization of a bank's executives, traders say.

To prevent a fraud similar to the one Kerviel is accused of, the Central Bank began verifications of the banks' controlling systems. "After the events at the Societe Generale, we wanted to make sure the controlling departments of the Romanian banks are functioning properly.

However, National Bank of Romania (BNR) officials believe that the possibility of bank fraud similar to that in France is unlikely in Romania due to a smaller financial market, more frequent controls by financial authorities, and the foreign currency ceiling placed on Romanian traders.

"Ever since the Societe Generale events, we have not heightened our controls of banks, but rather have ensured that the control departments of Romanian banks are functioning normally," according to BNR’s Supervisory Department Manager, Nicolae Cinteza.

Commercial banks are only obliged to periodically report major foreign currency exposure. "We check large exposures to avoid any surprises. There can be a Jerome Kerviel in any country, even Romania. Of course, keeping the fraud's proportions. So, we check risky exposures and intervene where these exposures exceed certain limits," Cinteza explained.

Traders say that if someone were thinking of embezzling from a bank they are working for, the fraud would be worth a few million euro. "In Romania, a simple trader can play €5 million a day on behalf of the bank. The differences between banks are small. For amounts larger than €5 million I must get written consent from my boss who cannot risk more than €50 million. According to this principle of professional hierarchy the maximum exposure that a trader can have with all of the approvals does not exceed €200 million. However, at this point, internal controls are very tough," a foreign currency dealer of a Top 3 bank told Business Standard.

"Exposure to foreign currency risk varies from bank to bank and from country to country. There are maximum ceilings according to hierarchy levels and days which a trader may not exceed. The fact that we still have a poorly developed financial market with relatively few sophisticated instruments was our chance not to have fraud like Societe Generale," according to a statement for Business Standard by Narcis Noaghea, Chief Dealer of Romanian Commercial Bank (BCR).

Cristian Sporis, Chief Dealer of Raiffeisen Bank, says that internal control mechanisms in Romanian banks are tougher than those in Western Europe. "Each transaction is checked and sometimes one is forced to further explain certain exposures, which decreases the possibility of fraud in our banking system," Sporis added.