Raiffeisen: We can do without a liquidity infusion

The local subsidiary of Raiffeisen Bank is waiting for Romania’s image to improve, through a rise in the country’s rating, and an effort by the National Bank of Romania (BNR) and an international institution to help weather the crisis.

“We are not talking about a capital infusion plan in banks. We do not need capital, and if we needed capital this is the shareholder’s obligation, which is non-negotiable. As a bank, we can very well survive without all kinds of liquidity infusion plans,” Raiffeisen Bank Romania’s President, Steven van Groningen, told Business Standard.

Last week Austrian’s Minister of Finance, Josef Proell, tested Bucharest’s reaction to the idea that Austria is requesting the European Commission to offer financial support for banks with exposure in Eastern Europe, including Romania. The amount is supposed to be €150 billion, double the Romanian banking system assets.

“If we want to continue the lending process and have a soft landing, we have to have access to resources. [...] If until now, every month and every year we brought money to the country with which we financed consumption and investments in industry, and if this process were to stop abruptly, this will obviously have a great impact on the economy,” said van Groningen. The President of Raiffeisen Bank Romania admits that lenders are partly responsible for solving the lending problem, but their liability is limited, considering that the price of foreign resources has risen by 6-7 percentage points, and the downgrading of Romania and the cost of the Cash Reserve Ratio (CRR) has made financial investors think twice about placing their money on the local market.

“Liquidity is pretty tight, and an international group which has liquidity is thinking: Where should I invest? If I invest in Romania, 40 percent goes to the National Bank, while elsewhere I use almost 100 percent of the financing,” added van Groningen. The banker said that the financial institution is trying to balance its loan/deposit ratio, which currently stands at 120 percent. “The situation is different for lei and foreign currencies because Romanians save in lei and want foreign currency loans,” added the bank official. Referring to the opportunities provided by the crisis, the President of Raiffeisen Bank Romania said: “I believe this would be a good moment to raise market share. The problem is that you must find low-risk opportunities. You have to be very balanced to allow yourself to think about this. But for now, the healthy strategy is to focus on existing clients.”

van Groningen said that, in order to overcome the crisis Romania should give clear signals to the international community on the manner in which it will finance last year’s excessive budget deficit, of 5.2 percent of gross domestic product (GDP).