International Monetary Fund and European Commission representatives have a new meeting scheduled on Tuesday with the representatives of foreign-owned commercial banks incorporated in Romania.
„Practically, there is a new important and interesting meeting taking place today (on Tuesday – Ed. note) in Brussels. This time, this is not about any requirements or assurance for Romania, but about a model. The IMF and the EC present central banks a Romania-made model they want to expand.
They first need to discuss it. We will receive an official release and see what happened. This is about the success model called Romania,” Adrian Vasilescu, adviser to the governor of the National Bank of Romania, told a television broadcast.
Commenting on the amount of capital foreign banks have been allegedly transferring abroad from the Romanian market, Vasilescu said the figure is EUR 1.3 billion, but the money did actually not flow out of the country.
„This is not money leaving Romania, but debt shifts from short-term into long-term debt, because, as the National Bank scrapped the required reserve ratio for bank liabilities with maturities of over two years, it is normal that banks tend to transfer short-term debts into long-term debt, for the amount to no longer be included in the minimum required reserves. So, it’s not capital exiting the country, but a debt shift. This money will go into crediting,” explained Vasilescu.
Representatives of the parent banks of the major nine foreign-owned credit institutions in Romania, holding an aggregate market share of 70 percent in terms of total assets, had a first meeting with the IMF and the EC representatives in Vienna (Austria) on 26 March 2009.
On that occasion, the parent banks signaled that it is in both in their and Romania’s interest that all institutions concerned assume the commitments related to maintaining the level of exposure to Romania in a concerted manner and admitted that their Romanian subsidiaries need to adjust to the current economic environment, marked by challenges; the bankers did not rule out the need for further capital injections, pledging to undertake such moves, should they become necessary.
The participants also expressed their willingness to support their Romanian subsidiaries in order to confirm that the affiliates’ current good financial standing will be preserved throughout the period of market turbulences and economic slowdown, to demonstrate their long-term commitment to the development of the Romanian economy and signal their willingness to contribute to the efforts of the international community to put in place a comprehensive and well-coordinated response to the crisis, reads the statement adopted at the end of the meeting.
„We are therefore prepared to make these commitments, within the framework of the multilateral support programs, on a bilateral basis with the BNR, and with the involvement of our home country supervisory authorities, according to European and the respective national regulatory frameworks,” reads the conclusion of the statement.