Investor fears of a potential default of Greece and its impact on the European financial markets along with the historic downgrade of United States of America’s rating have been keeping the stock markets in the ropes since August.
Most affected by far were bank stocks, especially of those banks that have exposure to Greece’s debt.
In Bucharest, the shares of the three listed Romanian banks BRD-Groupe Societe Generale (BRD.RO), Banca Comerciala Carpatica (BCC.RO) and Banca Transilvania (TLV.RO) suffered as a result of the investor panic, witnessing declines of over 17% from August 1 through October 11.
Controlled by Societe Generale group, harshly punished by investors on the Paris market for its exposure to Greece, BRD lost 17.4% or RON1.6 billion (EUR370 million) of its capitalization on the Bucharest Stock Exchange, so that it is now worth about RON7.9 billion (EUR1.83 billion).
BRD is the second largest bank in the system with assets of RON47.6 billion (EUR11 billion) at the end of June. It ranked first in terms of first-half profit, however, which amounted to RON282 million (EUR65 million), while the entire banking system made merely RON94.5 million (EUR22 million) profit.
The only Romanian-held lenders, Carpatica and Transilvania, were affected by the spillover from European stock markets and dropped by 17.5% and by 20%, respectively. Carpatica has lost RON40 million (EUR9.3 million) of its capitalization since August, which now stands at RON188.4 million (EUR43.6 million), while Banca Transilvania lost RON434 million (about EUR100 million).
Banca Transilvania, controlled by a group of Romanian entrepreneurs is the third largest bank by assets, which stood at RON22 billion (EUR5.09 billion) at the end of the first half.
Carpatica’s shares were saved from a more serious decline by rumors about a potential acquisition by an UK fund, AnaCap, of a stake in the bank. The information drove the stock up by over 15% two days in a row (October 4 and 5), while the rest of the banking stocks suffered significant corrections.
Even though the management denied it, saying there were no talks in progress over the sale of Carpatica shares or capital increases, investors hoped for a deal and the shares later resumed their downward trend in sync with the market.
“BRD is part of a foreign financial group and there is a risk that any sale of Societe Generale stock in Paris would also lead to a sale of stock in Bucharest,” says Adrian Danciu, head of the research department of brokerage company Broker Cluj.
“TLV stock decline can be explained by the fact that Banca Transilvania is one of the most liquid issuers on the Bucharest bourse and is influenced by investor sentiment on foreign markets. On the other hand, Carpatica was punished for the losses it reported.” (EUR1=RON4.3217)
(English version by Loredana Fratila-Cristescu)