How vulnerable is Romania to the ‘Greek tragedy’?

As it accounts for about one quarter of the banking assets in Romania, the economic crisis-hit Greece is becoming a risk factor that major international banks were quick to pick up.

What will happen if the Greek bankers cut the lines of credit to their Romanian branches, which are burdened by the non-performing loans anyway, foreign analysts wonder. Will the RON collapse? Will the local banking system be thrown off balance?

Morgan Stanley, Deutsche Bank and Citibank are beginning to warn about the risk of Romania being contaminated by the problems of Greece, considering the scope of the Greek banks' business on the Romanian market.

The three biggest Greek banks, NBG, EFG Eurobank and Alpha Bank, totalled almost 13% of the total banking assets in Romania in mid last year, with the latter two being top ten players.

In all, the seven banks with Greek shareholders accounted for about 27% of the equity capitals of the banking system last autumn, although their market share by assets was lower.

Deutsche Bank, the biggest German bank believes that this is why the crisis in Greece may affect Romania, as well.