Repatriation of banks' capital - risk to Romanian economy

The repatriation of banks' capital to parent companies may bare disastrous effects on the Romanian economy, says Central and Eastern Europe's largest brokerage company X-Trade Brokers in a press release. 'Romania rests extremely vulnerable to the risk of banks' repatriating their funds to the parent companies but, at the same time, on a medium to long term, such a measure would turn against those taking it (and not only), by the fact that the disastrous effects it would have on the Romanian economy would make it impossible for them to recover the financing and loans granted in the recent years,' says the head of the Romanian subsidiary of X-Trade Brokers, Victor Safta.

Cutting financing lines parent banks give to their subsidiaries in Romania would have dramatic effects on the Romanian economy because of the Romanian economy because of the shortage of liquid cash, of the blockage induced on company activity and of the 'annihilation' of retail lending, stress the X-Trade Brokers analysts.

'Moreover, let us not forget the major implications such action taken by parent-banks would have on the national currency', said Victor Safta.

'Withdrawing massive amounts of EUR from the Romanian market would take the exchange rate to such high levels that it would simply make many EUR borrowers default, which would badly affect all banks,' the X-Trade Brokers Romania Director further said.

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