The largest 14 banks by assets, which account for over 86% of the market together, granted 213 billion lei (EUR50 billion) loans, while having attracted only RON167 billion deposits from customers, which means a loan to deposit ratio of 127%.
The banking system average stood at 118% in mid year, according to the data published by the central bank (BNR). The loan to deposit ratio, however, differs greatly from bank to bank, from 64% in CEC’s case to over 550% for Austrian-held Volksbank. Volksbank operated as a “loan shop” supplied by the parent bank in Austria for years instead of being a traditional bank that attracts deposits and uses the money for loans.
Most foreign banks applied this business model on the local market more or less, after all, preferring to grant loans from the resources saved in the West instead of stimulating a savings market and BNR had no major objections considering the loan to deposit ratio.
“Some banks have only the customers’ deposits as their only stream of financing, which is why they apply a more aggressive interest rate policy. Others have unrestricted access to the interbank market or to funding from parent banks so that policies vary greatly from one bank to another,” comments Radu Craciun, Eureko’s chief investment officer.
Greek-held Alpha Bank and Banca Romaneasca, too, register a heavy imbalance of the loan to deposit ratio, 269% and 257%. The data was taken from the reports of the parent banks in Athens, so that the volume of loans also includes those granted by affiliated leasing or consumer finance companies.
The loan to deposit ratio of most banks is over 100%, except for Banca Transilvania (78%), CEC Bank (64%) ING Bank (66%) and RBS Bank (66%).
The largest local banks, BCR and BRD, had loan to deposit ratios of 129% and 111%. Bancpost, controlled by Greek EFG Eurobank group, had a 180% loan to deposit ratio, while UniCredit Tiriac Bank’s reached 160%.
The banks with the highest imbalance between loans granted and deposits attracted relied on the lines of credit from their parent banks, which are no longer sure to keep coming in a time of significant turmoil on foreign markets.
“There’s undoubtedly a risk for these banks and a potential reduction in the exposure of foreign banks will lead to a lower lending capability, especially in terms of foreign currency loans and to an increase in interests. There is also a good side to this, the rebalancing of the loan to deposit ratio,” says financial analyst Aurelian Dochia.
(English version by Loredana Fratila-Cristescu)