New Bank Tax Prompts BCR to Revise All Investment Plans, CEO Says

He said the lender is considering postponing all plans for investments to reach a viable business model.

Postponing investments leads to lower confidence in the economy and lower confidence leads to fewer people taking loans, said Manea.

“We are no different from other businesses,” said Manea, adding that if a company’s costs were to grow from RON100 to RON119, it would cut costs to go back to the initial RON100.

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The Romanian government introduced in late December 2018 a surprise tax on bank assets that will have banks pay a progressive tax of 0.1%-0.5% of assets if money market interest rates exceed 2%. It is yet unclear whether the tax would be levied annually or quarterly.

Banca Transilvania, the largest bank in Romania, called the tax a nationalization of banks’ profits and said it has halted plans for further acquisitions.

Banca Transilvania lost one third of its value on the Bucharest Stock Exchange since the announcement of this tax, going from a market value of RON11.3 billion on December 18 to RON8.3 billion on January 16, 2019.