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Romania’s Follow-Up Deal With IMF May Not Include Bank Exposures – Sources

Romania’s planned follow-up deal with the International Monetary Fund might not include a new agreement with the parent banks of the country’s top largest lenders, as the mother banks are maintaining their exposure at sufficiently high levels, people familiar with the negotiations said Monday.
Romania’s Follow-Up Deal With IMF May Not Include Bank Exposures - Sources
Florin BadescuIoana Tudor
24 ian. 2011, 16:25, English

Early 2009, Romania secured a EUR20 billion aid package from the IMF, the European Commission and other international lenders to cushion the effects of the recession.

The parent banks of Romania’s largest nine lenders met in Vienna at the time and agreed to keep their overall exposure to the country unchanged by April 2011, while ensuring capital adequacy levels over 10% for their local subsidiaries.

As of July 2010, the parent banks can reduce or increase their exposure to Romania by up to 5% compared to the initial level.

According to people familiar with the situation, the parent banks have not lowered their exposure to Romania since July last year. In fact, some of the banks have even increased their exposure, the mentioned sources added.

Jeffrey Franks, IMF mission head to Bucharest, told MEDIAFAX recently that Romania’s agreement with the parent banks is temporary and the country won’t probably need it any more in a year and a half, as the banks will want to increase their exposure voluntarily.

„Our expectation for the Vienna initiative was that this would be a temporary measure and (…) I think we are getting close to that point,” Franks said in October last year.