Saturday, June 11, 2011

Greek bank units in Romania well capitalised-cbank

By Luiza Ilie

BUCHAREST, June 10 (Reuters) - The Romanian subsidiaries of Greek banks are well capitalised and funding from mother banks accounts for only a little over a third of their liabilities, central bank Deputy Governor Cristian Popa said on Friday.

The units also have enough state debt on their portfolios to secure refinancing from the central bank or the interbank market to compensate for any potential downsizing in capital from their mother banks in the short term, Popa said.

Romania's leu EURRON= hit its lowest since March 17 earlier this week and some dealers had cited increasing pressure because Greek bank subsidiaries were striving to pull in hard currency.

Greek lending in central and eastern Europe is concentrated mainly in Romania and Bulgaria, both struggling to recover from sharp economic contractions and most exposed to any scaling back in funding as Greece's banks shore up their own finances.

"For Greek banks subsidiaries, these funding lines (from mother banks) are 35 percent, so some 4.1-4.2 billion euros," Popa told reporters on the sidelines of a financial seminar.

He said a recent leu currency softening against the euro was part of a regional move and not related to Greek banks' units operating in Romania. Some of the Greek banks with units in Romania are: Alpha Bank (ACBr.AT), National Bank (NBG) (NBGr.AT) and EFG Eurobank (EFGr.AT).

"We do not see significant withdrawals of deposits or capital from Greek bank subsidiaries," Popa said.

Almost 70 percent of credit lines were stable, with a maturity of over a year, Popa said. Funding lines from mother banks for the entire banking system accounted for 5.7 percent of liabilities, "a modest figure".

The leu was trading 0.2 percent higher on the day at 4.15 per euro by 1045 GMT, erasing some losses earlier in the week.



GREEK EXPOSURE

Banks with Greek capital make up about 30 percent of assets in the Bulgarian banking system and 17 percent of Romania's.

"As long as subsidiaries in Romania generate about a quarter of profits at group level I think it is pretty clear mother banks want to support their subsidiaries," Popa said.

Greek subsidiaries had a solvency ratio of 15.7 percent at the end of March, Popa said, above that of the overall banking system. He did not rule out the possibility of selloffs of subsidiaries further down the line.

"We think that these are good banks that if there ever is a shareholder transfer will be very interesting for potential shareholders," Popa said. "For now we have no indication that these banks might be sold."

Annual inflation ROCPI=ECI accelerated to 8.4 percent in May, but was below market expectations, and Popa said it may well quicken further in June. [ID:nLDE7590BR]

The central bank targets inflation at 2-4 percent this year and next, and its latest end-2010 forecast for price growth is 5.1 percent. It expects inflation to peak in June at below 9 percent, before falling gradually.

"I have reservations in saying that inflation has peaked in May," Popa said. "The figure is slightly better than expected. There's a possibility inflation will rise marginally by June."

(Editing by Ron Askew)

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