IMF Asks Romanian Ctrl Bk To Apply A Minimal 10% Solvency Limit To BksPublish date: 06-04-2009
The International Monetary Fund asked the Romanian central bank to determine the necessary additional capital for banks, based on stress tests, so that the solvency rate of each institution is maintained above 10%, a level higher by two percentage points than the current bottom limit, of 8%.
Stress tests will be applied to all banks with a market share (measured in assets) greater than 1%, as well as to smaller lenders, selected based on the quality and vulnerability of their lending portfolios, the evolution of low performance loans in the past year and the current solvency rate.
The central bank will take into consideration two scenarios in the stress tests, namely the macroeconomic frame considered in the agreement with the IMF, as well as a much more pessimistic variant regarding economic growth and the exchange rates, the quoted source said.
The central bank will sue its own macroeconomic model to determine the evolution of the other main macroeconomic indicators.
In addition, stress tests will consider the latest data available regarding the financial situations of banks and companies, to forecast the evolution of bank balances in the two scenarios.
The analysis of stress test results and the evaluation of capital levels will be performed in consultation with IMF experts.
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