The Austrian groups operating on the local market are Erste – via BCR, Raiffeisen, Volksbank and UniCredit Bank Austria – represented by UniCredit Tiriac Bank. The shareholders of the major local banks say they will not withdraw their money, but international statistics contradict them.
Exposure adjustment happened at a time when the agreement in Vienna requiring banks to maintain exposures had expired in March 2011 and euro zone turmoil worsened. In addition, Austrians are under heavy pressure to consolidate their capitals and as such they resorted to reducing exposure to the region starting from the riskier ones.
In all, exposure of foreign banks to Romania fell by about EUR2.6 billion in the third quarter, to EUR82.4 billion. Total exposure of foreign banks had gone up by EUR3.5 billion to EUR84.7 billion in 2010.
French banks reduced their exposure by EUR811 million in the third quarter, while the Greek banks, considered the highest risk factor, adjusted their exposure by about EUR713 million. BRD-SocGen, the second largest local bank by assets, and big names like BNP Paribas and Credit Agricole have local exposure. Italians, too, took money out of the market.
On the other hand, Dutch and German banks increased their Romanian exposure in the third quarter. Dutch banks are represented by ING on the local market, but there are also other lenders with local exposure, government paper included.
French and Austrian banks had increased their exposure to Romania in the second quarter of 2011, while Greek banks continued to lower it.
The third quarter was a time when euro zone turmoil became serious and banks came under pressure to reduce their exposure to risk. Romania, with a rate of non-performing loans of over 20% is considered a high-risk market.
On the other hand, some banks reached their Romanian government exposure limits or are close to this point, but this is not a high risk for government’s financing since the new cash needs amount to 11 billion lei (EUR2.53 billion), which can be absorbed by the market.
The Finance Ministry tries not to rely too heavily on the domestic market for security reasons, so that it plans to borrow up to EUR2.5 billion from abroad. The launch of a $1.5 billion bond issue on the Wall Street on Tuesday is part of the strategy to diversify funding sources and currencies so that the government could avoid extreme turmoil in the euro zone or pressures to increase costs on the domestic market.
(English version by Loredana Fratila-Cristescu)