Foreign banks cut credit lines to Romanian subsidiaries by EUR 0.8bn in January

By bne IntelliNews February 24, 2014

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
AL:Albania 314 610 57 56 234 11% 10% 75%
BY:Belarus 2,123 2,426 95 248 350 4% 12% 16%
BA:Bosnia and Herzegovina 3,542 1,886 -3 -307 -1,648 0% -15% -47%
BG:Bulgaria 13,216 8,744 -187 331 -4,187 -2% 4% -32%
HR:Croatia 19,821 16,823 -1,263 -2,501 -4,223 -7% -13% -21%
CZ:Czech Republic 24,296 21,070 529 2,373 -4,289 3% 13% -18%
EE:Estonia 16,030 7,056 -455 -1,032 -8,624 -6% -13% -54%
HU:Hungary 49,802 21,392 -1,145 -5,012 -29,498 -5% -20% -59%
LV:Latvia 17,988 8,063 -956 -1,606 -9,412 -11% -17% -52%
LT:Lithuania 15,169 8,650 -327 -182 -6,214 -4% -2% -41%
MK:Macedonia, FYR 138 982 -203 42 539 -18% 5% 391%
MD:Moldova 551 309 -12 -8 -302 -4% -2% -55%
ME:Montenegro 944 317 -10 -137 -629 -3% -31% -67%
PL:Poland 56,703 65,010 1,298 2,281 4,021 2% 4% 7%
RO:Romania 44,343 27,104 -1,298 -5,206 -15,712 -5% -17% -35%
RU:Russia 89,115 90,941 -829 2,721 -3,644 -1% 3% -4%
RS:Serbia 4,993 4,792 -163 -290 -337 -3% -6% -7%
SK:Slovakia 15,734 12,701 -206 1,269 -2,885 -2% 12% -18%
SI:Slovenia 21,921 7,472 -902 -2,528 -13,920 -11% -26% -64%
TR:Turkey 42,413 99,580 -2,626 17,794 50,810 -3% 22% 120%
UA:Ukraine 25,282 7,078 271 -3,041 -18,608 4% -30% -74%
TOTAL 464,438 413,006 -8,335 5,265 -68,178 -2% 1% -15%
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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