Foreign banks cut exposure to Romania by $5.6bn, 3.2% of GDP, in last year ending June

By bne IntelliNews November 19, 2015

Banks reporting to the Bank of International Settlements (BIS) have reduced their exposure to Romania in the last year ending June, when the exchange-rate adjusted outflows were $5.6bn (3.2% of GDP) – marking one of the sharpest reductions seen in the region, according to the latest report from the Vienna Initiative committee released November 17.

Local analysts received the news on a positive note, however, stressing the strengthening of local financial intermediation. The financing extended by foreign banks is in line with the local necessity, the head of UniCredit Romania’s supervisory board, Dan Pascariu, commented.

At the end of June, the exposure of BIS-reporting banks to Romania’s economy was $33.3bn, or 19% of GDP.

Outflows have eased in Q2 this year, when they were only 0.3% of GDP, compared to 1% of GDP in Q1 and 1.4% of GDP in Q4 2014.

For comparison, in the whole CEESE region, including Albania, Belarus, Bosnia-Herzegovina, Bulgaria, Croatia, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Macedonia, Moldova, Montenegro, Poland, Romania, Russia, Serbia, Slovakia, Slovenia, Turkey and Ukraine, outflows measured $72.8bn, or 2.1% of GDP.

For the region not including Turkey and CIS, outflows were only 1.3% of GDP and they reversed (turned to net inflows) to 0.1% of GDP in Q2 this year.

A split picture for credit growth has continued across the region, EBRD, commenting on the report, concluded.

A few emerging European countries, such as the Czech Republic, Estonia, FYR Macedonia, Poland and Turkey are experiencing positive growth in credit to the private sector, including both non-financial corporations and households. In contrast, credit growth has remained weak or has contracted in the rest of the region.

The strength of credit recovery is in part linked to the progress in the private sector balance sheet repair, as reflected in asset quality of loans held by CESEE banks.

  2015 Q2 stocks XR-adj flows $mn XR-adj flows % of 2015 GDP
  US$ mn % of 2015 GDP 12M Q2 15 12M Q2 15
Albania 1098 9.5 -12 -55 -0.1 -0.5
Belarus 2417 3.9 -236 -549 -0.4 -0.9
Bosnia-Herzegovina 1712 11 60 193 0.4 1.2
Bulgaria 10766 22.8 -1,131 -1,997 -2.4 -4.2
Croatia 21906 44.8 -708 -2,122 -1.4 -4.3
Czech Republic 43111 23.6 1,948 -51 1.1 0
Estonia 7797 34 3 -612 0 -2.7
Hungary 31300 26.4 -897 -4,335 -0.8 -3.7
Latvia 7182 25.8 -155 -412 -0.6 -1.5
Lithuania 7861 18.8 -101 -3,087 -0.2 -7.4
Macedonia 1396 13.8 83 -141 0.8 -1.4
Moldova 298 4.8 2 -75 0 -1.2
Montenegro 641 16.1 -48 0 -1.2 0
Poland 104862 21.8 5,227 363 1.1 0.1
Romania 33311 19 -517 -5,652 -0.3 -3.2
Russia 107998 8.7 -7,734 -50,898 -0.6 -4.1
Serbia 5533 15.1 -178 -614 -0.5 -1.7
Slovakia 22434 26 -1,316 1,138 -1.5 1.3
Slovenia 11710 27.4 -447 54 -1 0.1
Turkey 184456 25.5 -3,335 1,289 -0.5 0.2
Ukraine 6392 7.1 -473 -5,270 -0.5 -5.8
CESEE 1/ 614181 17.7 -9,963 -72,832 -0.3 -2.1
Emerging Europe 2/ 514085 16.8 -9,896 -69,862 -0.3 -2.3
CESEE ex. RUS & TUR 321728 21.3 1,105 -23,224 0.1 -1.5
CESEE ex. CIS & TUR 3/ 312620 23.1 1,812 -17,330 0.1 -1.3
Sources: BIS and IMF staff calculations.          

1/ All countries listed above.

2/ CESEE excluding the Czech Republic, Estonia, Latvia, Slovakia, and Slovenia.

3/ CIS includes Russia, Ukraine, Moldova and Belarus.

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