Foreign financial groups have reduced the credit lines given to their Romanian subsidiaries by EUR 800mn in January 2014 alone and by over EUR 4bn since the end of 2012, Ziarul Financiar daily reported, quoting data from the central bank. The stock of credit lines was EUR 13.4bn at the end of January, the daily said.
The pattern is expected to continue amid weak financing activity, the head of the central bank’s supervision department, Nicolae Cinteza, commented. The loans extended in the past have been financed from foreign liabilities but now the banks are substituting foreign credit lines with domestic liabilities, he added. Such a substitution is problematic [for local depositors] in cases when the quality of loans is worse than declared by the banks, Cinteza added without explaining why would this happen under the central bank’s supervision.
LATEST BIS DATA ON FOREIGN BANKS’ EXPOSURE
Foreign banks’ exposure to Romania’s banking system* at the end of September 2013 was USD 27.1bn, down from USD 31.4bn a year earlier. The outflows generated by banks reducing their exposure, adjusted for exchange rate changes, were USD 5.2bn in the 12-month period ending September 2013, or 16.6% of the initial exposure at the beginning of the period.
In the whole period starting at the end of 2008, the exchange rate adjusted outflows were USD 15.7bn, or 35% of the original exposure at end-Dec 2008. The percentage correction is in line with the region’s average where there are still extreme situations ranging from Hungary where outflows measured 59.2% of initial exposure to Poland which witnessed inflows of 7.1% of initial exposure.
* claims on banks
|USD mn||foreign banks' exposure||in/outflows||in/outflows||in/outflows||in/outflows||in/outflows||in/outflows|
|USD mn||USD mn||USD mn||USD mn||USD mn||% of initial||% of initial||% of initial|
|Country||Dec-08||Sep-13||Q3, 2013||1yr end-Sep||since end-2008||Q3, 2013||1yr end-Sep||since end-2008|
|BA:Bosnia and Herzegovina||3,542||1,886||-3||-307||-1,648||0%||-15%||-47%|
|TOTAL w/o RU, TR||332,910||222,485||-4,880||-15,250||-115,344||-2%||-7%||-35%|
|Source: BIS, IntelliNews|
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