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Stepic: EUR 5 bln, enough to rescue Romanian banking system from crisis

Steven van Groningen: We can only continue to lend more money in Romania if we manage to attract more deposits.

Romania needs EUR 10 bln to re-establish confidence in the economy, Raiffeisen Bank Group President Herbert Stepic told a press conference in Vienna, according to The Money Channel. Five billion of that should go exclusively into the banking sector, said the official.

Herbert Stepic believes that politicians should create aid packages similar to those in the West. ‘A ten billion package would probably be more than enough to secure liquidity on the market. Five billion EUR would be more than enough for the banking sector and the rest should be devoted to the real economy' Stepic said. He mentioned that, if the money cannot be taken out of the foreign currency reserves, the European Union (EU) would probably do everything possible to help a new member state, but it would also need the full support of the in-coming Romanian government.

The president of Raiffeisen International warned about Romania's high exposure to the international crisis because of its large current account deficit and because of the structure of its foreign debt, Agerpres informs. ‘I think it will be very difficult for Romania to re-finance its foreign debt in 2009,' Stepic said. He also believes that the new Romanian government will have many difficult challenges to overcome, with the most important of them all being the current account deficit. He appeared reluctant to IMF's possible assistance.

‘I am not sure if Romania should seek assistance with the IMF. I have learnt that Theodor Stolojan is the appointed PM, but we still need to wait for the government to be assembled and see how it will proceed. I really don't know if Romania should ask for IMF's help,' the RZI president stated.

Stepic named a range of measures he considered as necessary in Romania, but which he chose not to call advice to the in-coming government. ‘Reducing the current account deficit is a matter of the highest importance. There is no room for tax relaxation, pay rises are unproductive and the country needs to enhance its capacity of attracting EU funds. The engine of the economy must be kept running because, if it idles, it may be extremely difficult to jumpstart afterwards,' Herbert Stepic emphasised.

The Raiffeisen Bank Romania President, Steven van Groningen, in turn mentioned that his bank was not asking the state, hence the tax-payers, for any money but prefers using its own funds generated by a new cut of the compulsory reserves with the central bank, according to The Money Channel. The measure should normally increase liquidity on the market as well, van Groningen says.

‘We have talked a lot about what we should do in Romania. Mr. Stepic's message first wanted to say something like: if all countries in Europe did something, the Romanian Government should also do something, issue an economy rescue plan,' Steven van Groningen, CEO of Raiffeisen Romania stated. He further said that the bank could only continue to lend more money in Romania to the extent to which it would be able to attract more deposits.

The credits can be stimulated also through other method that will be proposed by the commercial banks to the National Bank, Steve van Groningen estimated yesterday, at Vienna, in a financial and banking seminar, according to Agerpres. He assured that the bank headed by him does not need financial support and does not have liquidity problems.

Ionut Dumitru: Economic growth pattern due to change

Participating in the same event, Raiffeisen Bank Romania Chief Economist Ionut Dumitru emphasised the fact that, in the aftermath of the financial crisis, exuberance would go away and the economy would return to the fundaments, ‘so the economic growth pattern would change', the Money Channel informs. ‘We'll move from consumption-based growth to investment and export-based growth. We forecast 2.5 per cent economic growth in 2009, indicating quite a rough slowdown,' he said.

The average rate EUR/RON will be RON 3.9/EUR, in 2009, declared yesterday Ionut Dumitru, at a financial-banking seminar held in Vienna, Agerpres informs. The same appreciated that the budgetary deficit will exceed three per cent of GDP, and the Government to be set up will have a very difficult task to increase the collection.

 

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Tags: should raiffeisen lsquo would growth government romania money romanian enough banking crisis groningen stepic

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