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EC and IMF welcome the reaffirmed commitments of the largest foreign banks in Romania
In a coordination meeting in Brussels of the European Banking Group held on 19 May 2009, the parent banks of the nine largest foreign banks incorporated in Romania reaffirmed the commitments to take action needed to support their subsidiaries in the country. These commitments, along with the balance of payments support package, will help Romania's banking system to weather the current crisis better, restore investor confidence, and return the economy to a sustainable growth path.
In light of the adverse effects of the global financial crisis on the economic and financial situation in Romania, the Romanian authorities requested balance of payments support from the International Monetary Fund (IMF) and the EU. The World Bank, the EBRD, the EIB, the IFC and MIGA are providing financial support, including under the Joint IFI Action Plan. The success of the macroeconomic reform program and the balance of payments sustainability also depends significantly on the continued involvement of foreign banks in Romania. On 26 March in Vienna, Austria, the parent banks of the nine largest foreign banks incorporated in Romania (Erste Group Bank, Raiffeisen International, Eurobank EFG, National Bank of Greece, Unicredit Group, Société Generale, Alpha Bank, Volksbank, Piraeus Bank) gave a general declaration on maintaining their overall exposure to the country and on increasing the capital of their subsidiaries, as needed (see Concluding Statement by Participating Banks).
Since the meeting in Vienna, the National Bank of Romania has conducted stress tests. The results have been discussed with the banks and the outcome confirms that they are well capitalised and have high liquidity buffers. As a result of the discussions held on May 19 in Brussels, the nine parent banks agreed to submit specific bilateral commitment letters in the coming weeks to fulfil the objectives agreed upon in Vienna. These commitments, including a precautionary increase in the minimum capital adequacy ratio for each subsidiary from 8 to 10% for the duration of the programme, along with the international financial support package will help Romania's banking system to weather the current crisis better, support investor confidence, and guide the economy to a sustainable long term growth path.
The European Banking Group Coordination Meeting for Romania was jointly chaired by the EC and the IMF. The World Bank Group, the EBRD, the EIB, the National Bank of Romania (NBR), the home country banking supervisors and ministries of finance (Austria, France, Greece and Italy) and the European Central Bank also attended the meeting.