Romanian Banks Get $758 Million in Capital Boosts in 11 Months

Romanian banks, 90 percent of which are foreign owned, got capital injections worth 572 million euros ($758 million) through November to help withstand shocks, said Nicolae Cinteza, the central bank’s bank supervision chief.

Banks including Banca Comerciala Romana SA and BRD-Groupe Societe Generale SA, agreed with the International Monetary Fund, the European Union and the Romanian central bank to keep money in the country and boost capital to meet a 10 percent solvency ratio threshold. The parent banks have also brought in an additional 75 million euros in funds for lending, Cinteza said in a phone interview from Bucharest today.

Romania’s banking industry is struggling with bad loans as its lingering recession hampers customers’ ability to repay debts. Parent banks have funnelled about 450 million euros in their units in the east European country to strengthen their capital over the past 12 months, BCR Chief Executive Officer Dominic Bruynseels said yesterday in an interview in Bucharest.

“I think banks are very important in a situation in which an economy needs to recover and banks themselves of course are rebuilding their capital positions as well,” he said. “Banks are rebuilding their balance sheets and making sure they meet the requirements of the central bank and that’s a good thing because it will help the economy come out of recession sooner.”

The country, which took an IMF-led 20 billion-euro bailout last year, will probably see its economy contract for a second year in 2010 because of austerity measures implemented in July to meet budget-deficit targets, IMF Mission Chief Jeffrey Franks said Nov. 1.

The Balkan nation’s banking industry is dominated by Austrian banks, which control 38.4 percent of the market, followed by Greek banks with 17 percent and French banks with 14.8 percent. BCR, owned by Erste Group Bank AG, is the country’s largest bank by assets. BRD-Groupe Societe Generale ranks second.

To contact the reporters on this story: Irina Savu in Bucharest at isavu@bloomberg.net; Andra Timu in Bucharest at atimu@bloomberg.net.

To contact the editor responsible for this story: James M. Gomez in Prague at jagomez@bloomberg.net

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