Romania's banks sheltered from toxic and highly sophisticated products

Publish date: 15-10-2008
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Banks in Romania found ways to develop on the local market and to obtain attractive profit margins which provided cover from the so-called toxic products or sophisticated instruments that caused troubles to Western lenders, the country's central bank (BNR) governor Mugur Isarescu stressed.

Moreover, the Romanian banking system did not come into contact with any type of subprime mortgage loans, added Isarescu.

The impact of the international financial turmoil on Romania is still limited, according to a BNR analysis, due to the country's focus on safer products, which assure attractive profits for banks, but also thanks to prudential norms imposed by BNR.

Romania's banking system has an overwhelming weight in the financial system because the stock exchange and other segments like insurance are much more reduced.

"What goes on at the Bucharest Stock Exchange (BSE) is worrying, but its influence needs to be considered in the context of the importance of the BSE in Romania's financial system," Isarescu explained.

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