Bankers on the crisis and market rebound measures

Local bankers say that lowering the cash reserve ratio (CRR) could be a solution to increase liquidity in the system. Furthermore, they agree that Romania needs a financing agreement with an international institution, either the International Monetary Fund (IMF) or the European Commission (EC).

The General Manager of ING Bank's local subsidiary, Misu Negritoiu, told Business Standard that the crisis is just beginning in Romania. The country will really start feeling its impact in the second half of 2009, and will fully understand it in 2010, according to Negritoiu, a former minister and experienced banker.

The National Bank of Romania (BNR) and the authorities will not help lenders overcome the crisis. Banks are in trouble and exposure in terms of mortgages will cause them grief.

More than 90 percent of local banks are owned by foreign groups.

"Thus, we are importing risks, and we depend on the actions of mother-banks. The banking system itself is an imported one. Austria, Greece and France have the largest exposure," Negritoiu said. Speaking of BNR measures to counter the crisis, ING's General Manager added that a recent decision to lower the key rate by 0.25 percentage points, to 10 percent, was symbolic and "has no effective impact on lowering interest rates." Furthermore, the central bank does not act preemptively.

Business Standard