“What will we do with the banks if a controlled fall of Greece occurs? I am sure the banks will be nationalized if there is a fall. Five banks in Romania would end up under the control of a Greek state ‘on life support’ if Greece’s default is declared,” Daianu said during a country risk conference organized by Coface.
“An exit of Greece from the euro zone can be imagined, even if everybody is denying it. There are scenarios being put together in finance ministries and central banks. Of course they are not discussed publicly, but they do exist,” he added.
He recalled that the recapitalization of CEC, the only top-ranking bank still in the state’s portfolio, was not approved, while across the whole of the European Union, banks were recapitalized with public money.
According to Daianu, Romania can say the presence of Greek banks on the local market has become a vulnerability, just as Austria, which has a very significant exposure to Eastern Europe, has.
The five Greek-controlled banks on the Romanian market together hold around EUR6 billion worth of deposits and 17% of banking assets.
The main threat posed to the local banking system since the Greek crisis extended more than could have been anticipated two years ago is of Greek banks having to suspend funding to local subsidiaries, sell assets and request early repayment of funding.
Daianu brought up the fact that financial markets contributed to the outbreak of the crisis through their excessive inclination towards speculative operations. “Financial markets destabilize economic systems because banking activity is dominated by trading. The big money is made from speculations. Traders gain from volatility.”
In response, Dan Pascariu, chairman of the Supervisory Board of UniCredit Tiriac Bank, said banks were not interested in the exchange rate volatility, although trading gains are supported by fluctuations, because at a rate of RON4.5 to the euro banks would need to recapitalize, since many clients with foreign currency debts would be put in a difficult situation.
(English version by Daniela Stoican)