Raiffeisen initiates talks to unblock lending

Herbert Stepic, Chief Executive Officer (CEO) of Raiffeisen International, said that the Romanian banking system would require some €10 billion to reestablish trust and liquidity.

“Politicians in Central and Eastern European countries must attempt to rapidly develop packages of measures to unblock liquidities. It is absolutely necessary to prepare measures to keep liquidities in the system, because otherwise we cannot continue lending to the real economy. In Romania, €5 billion would be more than enough for the banking system, and the remainder for the real economy,” Stepic added.

Similar measures to support economies have been adopted by many developed countries, as the lack of trust among banks, generated by the liquidity crisis, is considered to be the main loan blocking “culprit.”

Local bankers also indicated that the Romanian banking sector is in need of liquidity, but they believe that €5 billion is too much.

“I think the Romanian banking system needs money, but likewise I feel that €5 billion is too much. The banking system is doing well, even if we are currently facing a liquidity crisis, which is also affecting other countries, not only Romania,” said Patrick Gelin, President of Banca Romana de Dezvoltare (BRD), the second-largest lender on the local market in terms of assets. He expects the situation to worsen in 2009, as the level of costs will remain high.

“The biggest problem is 2009, not 2008. We need to inject money, but there are other measures to be taken also. However, the most important measure must come from the government, which should inject money into the system, into infrastructure and the construction sector,” added Gelin.

The funds included in the plan drafted by Raiffeisen officials would come from either money placed by banks in the Cash Reserve Ratio required by the National Bank of Romania (BNR) or an agreement with the European Commission. Banks authorized to operate on the Romanian market must deposit 18 percent of their lei liabilities and 40 percent of their foreign currency deposits with the central bank

“We are not asking to be allocated €5 billion from public funds. We ask that part of our money be unblocked from BNR’s reserves. In Romania, banks do not have a capital-related problem, as the degree of solvency in the system is 12 percent, but we must consider a series of measures to unblock lending, otherwise this will impact on the real economy,” said Steven van Groningen, President of Raiffeisen Bank Romania. 

‘It is absolutely necessary to prepare measures to keep liquidities in the system, because otherwise we cannot continue lending to the real economy. In Romania, €5 billion would be more than enough for the banking system'Herbert Stepic CEO Raiffeisen International