Stress Tests: Romanian Banking Provisions Up By 38% In 2010

The central bank's latest stress tests on the local market revealed lenders dispose of sufficient capitalization to resist a potential worsening economic and financial environment, the bank said in its financial stability report.

However, loan portfolios are mostly vulnerable to adverse conditions, the report noted.

"The deterioration of loan portfolios is mainly due to the exposure to companies (in 2010) and population (in 2011). Provisioning is estimated to increase by approximately 38% in 2010 and by 21% in 2011," the central bank said.

"Under the test scenario, the banking system's combined result will be null in 2010, followed by growth in 2011," it added.

In January to June, Romanian lenders reported combined losses of 234 million lei (EUR1=RON4.2396), from earnings of RON90 million in the same period a year earlier.

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