Financiarul

The Romanian banks more than doubled their exposure to the governmental sector over Sept. 2008-March 2009, from 3.7 percent to 8.1 percent, shows the Report on financial stability released by the National Bank of Romania (BNR) on Monday.

‘The claims of the governmental sector kept on an upward trend, with their evolution being marked by the faster rise in the portfolio of state bonds in particular, which doubled from the previous interval’, the report says.

The developments were the result of the banks’ need of state bonds in order to have access to the BNR credit facility amid the state’s increased need of financing following the steep rise in the budget deficit.

The imbalance of the public balance reached a record 4.9 percent of GDP in 2008 by the Romanian standards, and the government agreed with the IMF on a budget deficit target of 4.6 percent of GDP this year.

In 2004, as much as 2.4 percent of the Romanian bank assets represented claims to the governmental sector, while in 2006 their share dropped to 1.6 percent in 2007 climbed to 3.7 percent.

Once the international financial crisis worsened after Lehman Brothers bankruptcy, the state budget remittances were strongly affected and the share of the loans given the state by the Romanian banks constantly climbed to 3.8 percent of assets in Oct., 4.1 percent in Nov., 5 percent in Dec., 6.1 percent in Jan., 6.9 percent in Feb. and 8.1 percent in March.

The BNR operations resulted in the improved banking system liquidity by the rise in the state bonds stock owned by the banks, with the governmental credit countering the contraction of the credit given to the private sector, the report says.

The claims on BNR – the minimum mandatory reserves in particular – kept their share relatively constant over the last months close to 21 percent of assets.

Starting last autumn, the loans given the Romanian firms diminished their share of the assets from 31 percent in Sept. 2008 to 28.3 percent in March, while the share of the loans to the citizens dropped over the same interval from 30.3 percent to 28.2 percent.

The share of the population crediting in the banks assets climbed from 13 percent in 2004 to 29.9 percent in 2007 amid a lending boom strongly financed from external resources.

The domestic assets dominated the overall bank assets accounting for 98.1 percent in March.

The liabilities attracted on a domestic level increased their share from 70.2 percent in Sept. 2008 to 71.2 percent in this March.

The resources drawn by the Romanian banks from abroad represented 28.8 percent in liabilities in March.

The deposits attracted from the governmental sector kept their share relatively constant at 2.8- 2.9 percent, while the deposits attracted from the companies and the population continued the tendency to curb the importance by liabilities down to 42.9 percent in March from 46.1 percent in Sept. 2008 and 49.7 percent in 2007.

The banks capital and reserves recorded minor fluctuations by share of the aggregate liability, at between 10.3 percent and 10.7 percent ‘amid the capital increases operated by the shareholders of the banks in the system’, the report said.