Fitch has Romanian banking system at ‘D’, on a scale from ‘A’ (high quality) to ‘E’ (low quality). The outlook is stable.
“Trends in asset quality were mostly negative across CEE in 2011, driven by slow economic growth and rising unemployment (Bulgaria, Romania, Poland, the Czech Republic, Slovakia), and exacerbated in Hungary, Romania and to some extent Poland by weaker local currencies,” the ratings agency said in its latest outlook report on the banks in central and eastern Europe.
Fitch expects parent banks to gradually withdraw funding from CEE subsidiaries, even if evidence of deleveraging has so far been limited.
“Parent banks are facing capital and funding constraints of their own, and remedies include deleveraging of foreign subsidiaries, especially in less strategic markets,” the report noted.
The agency said funding constraints will probably restrict loan growth and pressure margins, particularly in markets more reliant on foreign funding, such as Hungary, Romania and Slovenia.
Another potential result of the pressures on parent banks could be exits from certain CEE investments, Fitch said.
“The greatest potential for mergers and acquisitions exists in Poland (due to low consolidation and weaknesses at some parent banks), Bulgaria and Romania (if Greek banks seek to exit) and Slovenia,” the report showed.