The capital increases in the first half of 2011 had been double this year’s first half level, EUR110 million, as Romania’s central bank was pushing banks, both foreign (Greek-held banks included) and Romanian, to consolidate their capital as to compensate for the losses caused by the fast deterioration of the loan portfolios.
The shift to international financial reporting standards (IFRS) as of January 1, gave banks a respite in terms of provision requirements, but the accumulation of new losses at the end of the first half (192 million lei or EUR43 million) and the rising costs of bad debt could put pressure on the capital again.
Solvency ratio remains close to 15%, which the central bank deems comfortable. As for the risk of spill of the foreign turmoil, it has diminished at least when it comes to Greece, because the share of the Greek banks in the total assets of Romania’s banking system dropped from 17.5% in 2008 to 12% in June 2012. (EUR1=RON4.5073)
(English version by Loredana Fratila-Cristescu)