Despite the last year significant economic growth in Romania, during 2016 the bank deleveraging continued, and the foreign debt of the bank, which includes financing from parent companies, had diminished. We are talking about a decrease of funds from parent companies of no less than EUR 3,4 billion to EUR 11,2 billion, compared to the maximum of EUR 25 billion reached in 2008. Such a decreasing trend in foreign bank exposure in our country appeared in 2012, when the Vienna Agreement expired, by means of which the main banks present in Romania obliged themselves not to withdraw significant capital from their subsidiaries.

It can be observed how the capital is withdrawn from the periphery towards the center, which is not a good sign, because it shows a decrease of the attractiveness of the Romanian market for these banks. And the reasons can be only two, whether these banks no longer trust Romania or they face problems “back home”, in their home countries. It is abnormal that after the 2016 year when the Romanian banking sector has registered high levels of profitability, the parent companies reduce their exposure in Romania and talk about deleveraging.

I believe that we should not expect a strong influx of capital from parent banks like the one in 2008, nor a more drastic reduction in exposure. The positive aspect of this situation is that banks in Romania have more liquidity at this moment, cash placed in deposits, in order to support the lending process.

Given that the Romanian banking sector has a higher average profitability than the European one, non-performance declined strongly and Romania registered the highest growth rates in the European Union, although based mainly on consumption, a question arises regarding the reasons for which we are witnessing the withdrawal of capital. Are Romania and this area seen as risky on the long term, taking into consideration the recent discussions on the future of a two-speed Europe?

Dr. ec. Adrian CRIVII, FICS, REV, MAA
Director general DARIAN DRS SA