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Analysts: International Financial Crisis May Affect Romania

The international financial crisis might have an indirect effect upon Romanian economy, as this could reduce capital flows and investors’ appetite for risk, analysts said.
Analysts: International Financial Crisis May Affect Romania
16 sept. 2008, 19:35, English

 “The influence of the international financial crisis and the slowdown of the US economy will be reflected mainly on the country’s foreign trades and will reduce investors’ appetite for risk. The Romanian banking system will be affected as well. We can expect tighter lending conditions and higher costs, given the country’s foreign external unbalance,” Standard&Poor’s (S&P) analyst Marko Mrsnik said.

International financial markets were strongly hit on Monday after Lehman Brothers, US’s forth largest investment bank by assets, announced its bankruptcy on Monday.

US largest retail bank Bank of America, said on Monday it plans to take over financial group Merrill Lynch for $50 billion.

"Romania has borrowed significant amounts of money from abroad over the last years, triggering a growth of the country’s economy. It is highly unlikely for the economy to maintain its growing pace, as capital flows will be reduced, Moody’s Investors Service deputy president Kenneth Orchard said Tuesday.

The representatives of UniCredit, Erste, Raiffeisen, ING or Societe Generale said their local branches in Romania might face problems as well.

On the Bucharest Stock Exchange, shares plummeted 7.41% on the day, its most severe correction since March 2005. Romania’s second-largest lender BRD-Groupe Societe Generale lost 13.25% on the day to RON13.1 per share.