The information was published in the latest FGDB report, which refers particularly to the bridge-bank.
At the end of 2010, the FGDB had just 1.7 billion lei (EUR407 million) available, and the European Central Bank recommended that the fund does not use its own money when financing the bridge bank.
In a context of extreme crisis and contagion risks for the local banking market, the International Monetary Fund asked Romania’s central bank to strengthen the set of instruments available for quick and efficient intervention in special situations.
The bridge bank is a lending institution that could appear on the market when the National Bank of Romania (BNR) decides a bank of relevant size for the financial system can no longer cope on its own or rely on support from its majority shareholder.
The central bank can decide that a bank’s assets and liabilities be transferred to the bridge bank for two years, and then sold to a solid investor. This will ensure continuity of the bank’s activity and the clients of the troubled bank will not be affected.
The guarantee fund obtains money from initial, annual and special contributions paid by the lenders participating in the fund. Other sources of income include the investment of profit achieved, the collection of receivables for bankrupt companies and an endowment received as liquidator.
Banks-Insurance
Bridge Bank To Get Money From Guarantee Fund's Private Resources
The private resources of the FGDB, a fund guaranteeing bank deposits, will be used to finance the bridge-bank, while public funds will only be used in the form of a loan granted by the Finance Ministry to the FGDB.