The head of state reiterated earlier comments on the planned recapitalization of European banks, saying the mother banks need to make sure their Romanian subsidiaries remain well capitalized.
Basescu said Romania is borrowing 56 billion lei (around EUR13 billion) from the local market in 2011 to finance budget spending and sustain its deficit. If confronted with capital outflows from banks, the country wouldn’t be able to cover its budget expenses this year, he added.
“This is why we ask that the recapitalization of the Euro area banks consider the necessity for steady capital inflows for their subsidiaries,” Basescu said ahead of his departure for a European Council meeting in Brussels.
He said Romania wants the Council’s guarantee that the mother banks will not withdraw funds from their Romanian subsidiaries in order to comply with the EU’s plan to boost capital ratios.
European Commission President Jose Manuel Barroso said Wednesday after a meeting with Basescu that he agrees the bank recapitalization should not affect cash inflows in Romania.
“We are discussing with the Ministers of Finance in order to make sure that all national banking supervisors work together… The national supervisors will insure that the Euro area parent banks will continue to provide capital support for their Romanian affiliates if needed, as committed during the last Vienna initiative meeting on Romania in March 2011,” Barroso told a news conference.