The Austrian media writes that, if 10% of BCR's portfolio were to become bad debt, the bank should receive help from its majority shareholder Erste Bank, or else it would go bankrupt.
The quality of loan portfolios in the banking system has already worsened considerably.
At the end of last year, the share of loans and interests rated as doubtful and loss rose to more than 6.5% of the total loans and interests registered by banks, which is 2.5% more than in December 2007, according to the NBR data. Bad debt reached 3.38% of the total banking equity capitals, while its share of the total assets stood at 0.34%.
Eastern European countries, Romania included, could lead Austria to bankruptcy, as the Austrian banks cannot bear the losses of their branches in the region by themselves, and the state would be forced to step in, Austrian publication Profil was quoted as saying by Mediafax.
The Austrians, noting the significant volatility of the currencies in the region against the euro wonder, "If the state bails out the banks, who will bail out the state?" Austrian groups dominate the Romanian banking system, as they control BCR, Raiffeisen, Volksbank and UniCredit-Tiriac Bank, some of the biggest local banks.
At the end of last week, the Austrian Finance minister met with Romanian Finance minister Gheorghe Pogea and with central bank Governor Mugur Isarescu.
At the end of his visit in Romania, Proll explained banks needed to receive local support cash-wise and local authorities needed to ensure monetary stability.
On the other hand, he said the local subsidiaries of the Austrian banks would indirectly benefit from the 100bn-euro bailout scheme implemented by Austria.
"Citizens in Eastern Europe continue to pay their loans, but analysts anticipate default cases to double over the coming years, because the people have no savings, while unemployment risk is on the rise," Profil says.
The latest data published by the NBR for November show that most delinquent loans (on the retail segment) are RON-denominated, which generally are low in value and unsecured.
As a result, it remains to be seen what impact the strong depreciation of the RON will have over the next three months.
Even the National Bank's chief economist, Valentin Lazea, recently highlighted the decline of the people's deposits in real terms in December, considering as a possible explanation the fact that people redirect their savings to pay the rising loan instalments.
"In 2007, BCR had one billion euros in equity capital and granted eight billion euros in loans in Romania. If 10% of these eight billion can no longer be collected, the equity capital goes down from one billion to 200 million, which means the branch in Romania would urgently need capital, and the simplest way to get it would be to request it from its parent group, which owns 70%," Profil editorial staff calculates.
Local analysts are more optimistic, however, feeling Romanian banks are well capitalised so as to be able to absorb the shocks of the deteriorating credit portfolios.
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