IMF: Parent Banks Reaffirm Commitment To Romania

Officials of the parent banks met in Brussels Wednesday with representatives of the Romanian central bank, the IMF, the European Commission and other international lenders to review the commitments assumed by the nine banks regarding total exposure to Romania.

„These banks have reaffirmed their intention to act to meet their commitments. In this respect, banks emphasized the need for the availability of appropriate investment instruments,” IMF said.

It said the parent banks’ exposure to Romania was broadly maintained to the levels recorded end-March, with a few exceptions, when exposure „temporarily fell below the agreed level.”

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Two international lenders have temporarily withdrawn EUR2 billion from the Romanian market recently, because they were unable to invest in short-term foreign currency facilities, people from the central bank told MEDIAFAX recently.

Early November, the IMF said will work with the parent banks to bring exposure back to the March level, as financing on the local market has dropped 2% since.

All parent banks complied with their commitments to keep their subsidiaries’ solvency ratio above 10%, the IMF noted.

„The commitment by parent banks, along with the financial support from multilateral lenders, will help Romania’s banking system to better withstand the current downturn and to return the economy back to a sustainable growth path, the participants concluded,” it added.

The nine parent banks are Erste Group Bank, Raiffeisen International, Eurobank EFG, National Bank of Greece, UniCredit Group, Societe Generale, Alpha Bank, Volksbank, and Piraeus Bank. Their market share amounts to around 70% of the local banking system.

Romania secured in the spring a EUR20 billion aid package from the IMF, the EC and other international lenders to cushion the effects of the recession.

The IMF reiterated the loan arrangement is still in effect and a new mission to review Romania’s progress will return to Bucharest „as soon as the political situation has been clarified.”

The eastern European country was thrown into political turmoil after its government failed a no-confidence vote in parliament mid-October. A new government is not expected to be formed until after the presidential elections due November 22, with a run-off on December 6.

Both the IMF and the European Commission have halted further loan tranches to Romania until after the country has a proper government in place.