Top meeting in Brussels to discuss possible withdrawal of exposure by foreign banks in Romania

The main topic is the local exposure of Erste Bank, Raiffeisen International, Eurobank EFG, National Bank of Greece, UniCredit, Societe Generale, Alpha Bank, Volksbank, and Piraeus Bank.

In a scenario expected by analysts and the representatives of some of the nine banks, they should maintain their exposure. In a second scenario, less optimistic, bank officials could request the reduction of their exposure in Romania. BNR has recently admitted that the nine foreign financial groups reduced their exposure in Romania by two percent between March and September 2009, which means €700 million.

“Romania is an attractive market for the nine groups, and I do not believe that lowering their exposure would be in their advantage. I also believe that Erste will maintain its exposure in Romania, given the fact that it is the main local player. Regarding the previous reduction of exposure, I think this did not come from large players. It was probably some banks that do not have strong positions on the deposit segment, which needed liquidity,” said Jany Gernot, Erste Bank analyst.

Today’s meeting comes after BNR’s recent cut of the cash reserve ratio (CRR) for foreign-currency liabilities to 25 percent from 30 percent. Thus, the central bank released €1-1.2 billion of the reserves of commercial banks, so lenders can have liquidity and finance the state budget.

“The possibility that the money resulting from the National Bank’s decision will be moved elsewhere by banks is minor or inexistent. This is a move with a clear message for the market and banks, with respect to the way this money must be used, namely for finding liquidity on the domestic market and covering the budget deficit, in the coming months,” Mihai Tanasescu, Romania’s representative at the IMF, told The Money Channel.