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Lucian Croitoru (BNR): Romanian banking system not to be affected by request to capitalize banks

The Romanian banking system will not be affected by the request to capitalize the eurozone banks nominated after a stress test run a few months ago, following a decision made on Wednesday night by the European leaders, advisor to the BNR Governor Lucian Croitoru said on Thursday.

'The fact that the capitalization of the banks in the euro area was demanded, banks that were identified following a stress test run a while ago, raised the issue that the effort to reach this capitalization might affect the banks in the emergent countries. If this capitalization were made with money from these countries, of course the growing potential would be reduced. We have made efforts to get where we are. Practically, the way the banking system looks like at the moment, we will realise our fears are exaggerated in Romania,' stressed the advisor of the Governor of the National Bank of Romania.

According to him, the measure by which the core capital reserves of banks will have to reach 9 percent on June 30, 2012 can seem a pretty difficult task whereas the 50 percent cut of Greece's sovereign debts might incur losses for the banking system that invested in those funds.

'I believe the measure by which these initiatives will restore confidence depends on the way the market will assimilate these decisions after trying to correlate them. The 50 percent cut of the sovereign debts incur losses for the banking system that invested in these funds. We need time to see if a conclusion meeting the expectations can be reached and then we will see if we are talking about confidence again or not,' said Lucian Croitoru.

The leaders of the EU member states agreed on Wednesday night in the extraordinary European Council a plan to recapitalize banks calling for urgent measures, necessary in order to consolidate the prudential control of the European banking sector.

Regarding strictly the capitalization of the banks, the statement of the EU state leaders indicate that there is a comprehensive agreement on the necessity of a higher capital ratio of 9 percent of the quality capital and of creating a temporary buffer system required by exceptional circumstances, after the market evaluation of the holdings at the sovereign debt starting on September 30 this year. This capital target will have to be achieved by June 30, 2012 based on the plans agreed with the national supervisory authorities (under the coordination of the European Banking Authority.

The Authority evaluated on Wednesday the need of recapitalization at 106 billion euros. The Greek banks are the main targets (30 billion euros), ahead of the Spanish (26.16 billion) and Italian (14.77 billion).

Besides, the eurozone summit concluded during the night between Wednesday and Thursday led to a set of measures to solve the crisis, among which the 50 percent cut of Greece's debt towards private creditors and the improvement of the bail-out fund EFSF (European Financial Stability Facility).

The private banks and equity funds accepted a voluntary writedown of 50 percent of their holdings of Greece's debt by 2020. Basically, starting on January 2012, the banks will replace the Greek bonds they have with others whose value will be halved. This is the 100 million euros write-off from the current debt of Greece standing now at 350 billion euros, Agerpres reports.

Sursa: http://www.actmedia.eu

Tags: european percent billion banks system lucian banking croitoru euro bnr

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