Bancherul - BANCI / ENGLISH / JPMorgan: Greek banks’ potential withdrawal from Romania would not pose a major problem

Greek banks’ potential withdrawal from Romania would not pose a major problem to the local banking sector, because the authorities have the necessary resources to take over the subsidiaries and sell them to other financial groups later on and the National Bank of Romania (BNR) is able to absorb the shocks, reads a report released by JPMorgan Chase Bank, London yesterday.

‘We do not see a possible withdrawal of Greek banks from Romania as a major problem for the country’s banking sector given the fact that Greek parent-banks’ financing only amounts to 3.5 per cent of GDP. The authorities have the necessary resources to take over the subsidiaries and sell them on to other foreign financial groups. The central bank’s reserves of almost 30 per cent of GDP are enough to compensate any possible withdrawal of funds’, the report further notes.

The analysts say BNR can manage the risks associated with the Hellenic banks whose Romanian subsidiaries do not actually have an exposure of their own to Greece’s sovereign debt and which are well capitalised. Developments in Greece have, indeed, hit the RON lately, but the currency has been also affected by the rising global investor aversion to risk, JPMorgan notes.

The bank anticipates that, in the upcoming period, the RON would return to the rate of 4.1/EUR before the current period of depreciation. The local currency has had the poorest performance in the region and has suffered an exaggerated fall, say the analysts of the financial institution. BNR’s reference exchange rate was RON 4.2294 to the EUR, down by 2.23 centimes compared to Wednesday.

With regard to the economic outlook, JPMorgan estimates the Romanian GDP will grow by 2 per cent this year, with the biggest risk for the local economy being the recent slow-down of global economic activity.