BNR Supervisory Head Says No Withdrawals From Greek Banks

05.25.2011 ZF English

Greek banks, which control 17% of Romanian banking assets, have not withdrawn financing lines from local subsidiaries ahead of time so far, central bank officials said.

Banks controlled by Greek investors have sufficient liquidity and are not under pressure to borrow heavily from the market, says Nicolae Cinteza, head of the Supervisory Department of the BNR, the Romanian central bank.

The Greek hold 17% of Romanian banking assets and have a similar share of the deposit segment, with funds attracted from local customers amounting to around EUR6 billion.

"I speak with officials in Greece at least on a weekly basis, we are in permanent contact with them.

There have not been early repayments of resources attracted from Greece so far, only of loans that reached maturity," Cinteza told ZF.

Greek banks are facing major withdrawals of deposits on their market of origin, with customers moving their money abroad amid intensifying tension over a potential restructuring of Greece's public debt. In addition, Greek bankers face the daunting prospect of not being able to refinance their government securities with the Central European Bank if Greece resorts to restructuring its debt, which would leave it very short on cash.

The Greek banking sector has a significant presence on the Romanian market, with Alpha Bank and Bancpost (the latter controlled by Eurobank), ranking sixth and ninth at the end of last year. Moreover, Piraeus is at number 10, while Banca Romaneasca, a member of the National Bank of Greece, ranks 12th.

"We have excess liquidity for this period and there are no other signs of concern. The loans we have taken out from the parent bank are long-term, they all have over three-year maturities," commented Sergiu Oprescu, executive president of Alpha Bank. He says local customers have not reacted to the international tensions and there have not been deposit withdrawals.

Nicolae Cinteza did not say how high the lines of credits the Greek-held banks got from abroad were, but said that they were comfortable in terms of solvency and liquidity.

"Their solvency (capital adequacy ratio, the ratio of a bank's capital to its risk) is higher than the system average, the asset quality is at the system average, liquidity is good," Cinteza says.

On Monday, Fitch rating agency announced it had cut ratings assigned to the big Greek financial groups to "B plus", a category that indicates a high risk. The decision came after Greece's sovereign rating suffered a similar correction at the end of last week, which dealt a fresh blow to bankers.