Dragulin, NBR: There is a risk of spillover among countries

The scope of cross-border spillover of the deterioration of bank portfolios in the global banking system remains wide, due to common exposures of the large financial groups, said the Director of Financial Stability, National Bank of Romania, Ion Dragulin.

He said that Romania is very important for the countries in the region, as the shortfalls contained in a Romanian bank’s balance sheet could set off chain reactions across the region, via parent bank’s global operations.

“Common lenders’ profit and loss in particular can resonate across the entire banking system”, said Dragulin.

Romanian banking system is largely held by foreign players, most of them from Austria, Greece or Italy that run operations in other countries in the region.

On the other hand, the NBR director added that banks’ capital adequacy ratio among Romanian banks hadn’t suffered any decline last year, but even improved in certain cases.

In Romania, the banking system was helped by the absence of toxic assets and by NBR’s efforts to raise capitalization that began before the fall of Lehman Brothers in September 2008.

For the time being, no bank in Romania has a capital adequacy ratio below the statutory 10% limit, “and it’s not the case to go down below the threshold”, Dragulin pointed out.


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