IntelliNews - Romanian Financial Sector Report

05-Mar-2012 | News-Press Release

The IntelliNews Romanian Financial Sector Report offers an extensive summary of the Romanian financial market, segmented into banking, insurance, leasing and monetary sectors. It includes a complete coverage of the latest developments, trends and corporate news, accompanied by thorough statistics and comments. This sector report is ideal to keep you abreast on recent company and industry news. Written by local professionals, it is a unique market and business intelligence analysis, tailored to save time by providing in-depth information, while helping you to make confident and informed business decisions.

The stock of loans has increased slightly since the beginning of 2010, by 4.7% y/y in local currency and 3.3% y/y in euros, driven by the foreign lending [8.3% up y/y in euros]. Nonetheless, the stock of bank loans has remained more or less constant since the end of 2008 -- when the credit crunch occurred, and unblocking lending is broadly seen as paving the way to economic expansion. In our view however, broadening the financial intermediation mechanism is also needed in order to improve the resources’ optimisation. In regard to the deadlock on the credit market, both lenders and investors have visible problems in adjusting to the new situation.

While the banks have not settled their bad loans problem, investors are very reluctant to take risks. None of them seems however to have adhered to the low-margin strategies that will be needed on medium to long term. The convergence-driven logic of doing business in Romania before the credit crunch in 2008 was an inflationary logic of high profit margins and high interest rates. At that time, sustainable, low-risk businesses were generally discarded by loan officers in favour of high profit deals that proved high risk ex-post. This resulted in a poor quality of the investments in the years before the credit crunch. For various reasons including but not limited to lower potential growth rate at home, currency wars and sustainability, bankers will have to reconsider their lending policies and investors also need to focus quality sustainable projects. industry reports

The Romanian bank's aggregated loss diminished to EUR 55mn) from EUR 150mn in Q2, local media reported quoting central bank governor Nicolae Cinteza in late October. The majority of the large banks generated profits in the quarter and the problems accumulate in the region of smaller banks.

However critical might seem banks’ financial circumstances at this moment, the Non-Bank Financial Institutions, namely leasing companies and consumer finance firms, have fared even worse last year. The good news for the pension system is that the second pillar, namely the compulsory private pensions, are not being dismantled as it just happened in Hungary and Bulgaria. The mandatory and voluntary pension funds generated average yields of 15.1% y/y and 11.5% y/y, respectively, as at end-2010.

The premium income of the domestic insurance market decreased by 5% in local currency or 4% in euros to RON 6.3bn (EUR 1.5bn) in Jan-Sep, market surveillance body CSA said.

The general government deficit narrowed by 8.6% y/y nominally to RON 33.3bn (EUR 7.8bn) in 2010, or 6.5% of the estimated GDP down from 7.4% in 2009, revealed the preliminary data from the ministry of finance.

Executive Summary
Macroeconomic Outlook
Leasing & Consumer Fin.
Insurance, Pensions
Public Finance

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IntelliNews - Romanian Financial Sector Report


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