IMF to try to get preventive recapitalization from mother banks operating in Romania, Austria deemsPublish date: 01-04-2009
The International Monetary Fund could try to obtain preventive recapitalization from mother banks operating in Romania according to an official Austrian document, also showing Romania was given the possibility to contract a bilateral loan from state with particular interests, but refused to.
Romania turns to be a victim of the crisis to a larger scale than estimated, but a real catastrophe can be eluded even if the economy will not recover until the end of 2010, an official document preparing the visit of the Austrian foreign minister Michael Spindelegger in Romania read.
According to the estimates of Austrian officials, Romania is considered to stand at an average level in Europe compared to Baltic countries and Ukraine, near Germany and Great Britain, with a growth rate of -4 percent
The document stresses the lack of confidence in the optimistic economic growth prognosis of the Romanian Cabinet. The IMF sees Romania's economy contracting by 4 percent this year while the government says 1 percent. At the beginning for the year the industrial production lowered an annual 12 percent, exports slumped 26 percent and imports 34 percent according to the document.
However, Romania could be one of the crisis' victims with the slumps in exports, imports and lending clog, all coupled with the sudden real estate braking. All these could have a negative impact on consumption as well.
Therefore, even if banks in Romania have an average solvency of 12 percent, the IMF could try to get Austrian mother banks to preventively recapitalize subsidiaries in Romania, the document reads.
The rising number of credits in foreign currency could fence significantly the central bank's operation area in Romania. Moreover, the leu's rapid deterioration should be avoided with the intervention of foreign currency reserves which makes it difficult to lower the minimum mandatory reserves from the current 18 percent at passives in lei and 40 percent in foreign currency.
As for the economic comeback, the IMF believes a slight recovery could be seen in mid-2010, but the significant advance of the past years will not be witnessed too soon. One downside mentioned by the document is the slow moving pace of the absorption rate of European funds.
Austria agrees with the welfare the IMF loan will bring on Romania, raising confidence in the economy, the document read.
About 35 percent of the Romanian banking system and 44 percent of the insurance market are controlled by Austria. There are 5,200 companies with Austrian capital in Romania and investments stand at 12 billion euros.
- Insurance market stagnated in 2013 while GDP chare dropped to 1.3%
- The Romanian Leasing Market as of December 31, 2013
- Millennium Bank reports best results since its launch, helped by stronger banking income and cost cuts
- BCR cheapens First Home loans and lowers interest loans for loans in lei
- Millennium Bank's new Salary account clients receive up to 600 lei bonus and their utility bills' payment
- GarantiBank and Seamless introduce SEQR in Romania: the newest mobile payment solution
- Bancpost telecom services, now provided exclusively by Romtelecom and COSMOTE Romania
- Millennium Bank cards offer discounts in Domo stores
- BCR Supervisory Board reshuffles Management Board
- NBR decide to lower the monetary policy rate to 4.25 percent per annum
- Common appointments in Romtelecom and COSMOTE Romania
- Up to 5.5% annual interest rate for Millennium Bank's promotional three-month lei deposit
- Eurozone in recovery mode but gap between North and South still widening
- UniCredit Tiriac Bank and RBS Romania announce the successful completion of the retail clients' migration
- Millennium Bank grants First House loans in lei