Romanian banking system, still vulnerable; 2014, a year with a major loss

In a day in which two important banks released financial results, Radu Ghetea, president of Romanian Banks Association, comes to confirm the bad situation.
He announced the domestic banking system will end 2014 with a major loss, given the cleaning balance sheets of bad loans process, which ought to complete at the end of September, but it not yet finalized.
“In 2013 the banking system was on slight increase, but in the previous three years it recorded losses. National Bank of Romania (BNR) already announced at eight months a loss in the system, and clearing balances sheets process had not yet begun well. I said and I repeat: Largely, banking system pays crisis’ bill because all these provisions that we must make for bad loans mean the number of money that we did not have recovered from customers that went bankrupt, which, perhaps, we are not going ever to recover it at the initial value for the meantime. Because customers will not be able to move at all, or the guarantees that we have, no longer have the value that they had before” Ghetea explained in a press conference, quoted by Agerpres.
Regarding the evolution of non-performing loans by the end of this year, ARB President said that BNR and the whole system want to reach a percentage of NPL comparable to the average in the European Union.
“That means to decrease far below what we have now. There were cleansing of balance sheets, but not entirely. The action is not simple. There are thorough activities, checking all credits, all legal situations of customers who are in various stages of insolvency,” Ghetea also said.
Recently, a Deloitte Romania study reveals the Romanian banking system’s NPL will drop to 16 percent in 2016 from 18 percent this year.
Often, international financial institutions warned that Romania’s banking system is vulnerable to Europe’s debt crisis and urged Bucharest to strengthen its financial sector oversight and crisis management framework.
According to BNR, the total deposits placed by resident customers in local banks grew by 5.4 percent, (EUR 2.5 billion), from September 2013 until the same month of this year, while the total loans outstanding granted by domestic banks have decreased by 4.5 percent, (EUR 2.26 billion), during the same period.

ARBbalance sheetsbanking systembanksBNRcrisiscustomersdeloittedepositsEuropean Unionfinancial resultslossNPLRadu Ghetea
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