Companies Move Money To Foreign Bank Branches

10.20.2011 By Ciprian Botea

Companies increased their deposits in foreign currency held in foreign bank branches by the equivalent of 2.8 billion lei (some EUR660 million) in the third quarter, while the institutions operating under a local banking license only got RON1 billion worth of foreign currency deposits, reveal Bank Deposit Guarantee Fund (FGDB) data.

Out of the major banks on the market, only ING Bank and Citi operate as branches and not as subsidiaries. The fund does not guarantee the deposits attracted by the banks operating as branches of foreign lenders, as the amounts in question are guaranteed by the similar mechanisms in place in the countries origin of the parent institutions.

"The highest contribution to the increase in deposits came from the rise in the amounts put in foreign bank branches, by the equivalent of about RON3 billion, while the increase for local lenders stood at RON1 billion," reveals a report published by the Bank Deposit Guarantee Fund.

Companies and consumers had almost RON300 billion in deposits in banks at the end of September, of which leu deposits accounted for approximately 53%. Locally regulated banks attracted most of the leu deposits, so that the volume rose by RON1.4 billion in the third quarter. The volume of leu deposits in the branches of foreign banks increased by RON300 million during the same period.

The volume of deposits guaranteed by the fund exceeded RON138 billion at the end September, while the maximum amount covered stood at almost RON110 billion. The fund guarantees deposits up to EUR100,000; anything above that is not covered.

(English version by Loredana Fratila)