Erste Group, the majority shareholder of BCR, has not lowered its exposure to Romania compared with the same time last year and is ready to provide additional capital to the biggest Romanian bank when the NBR changes minimal share capital requirements, says Andreas Treichl, CEO of Erste Bank and chairman of BCR’s Supervisory Board.
"We keep our commitment to Romania and to BCR and will comply with the requirements of the regulatory authority. At present, all our subsidiaries are well capitalised and compliant with the standards of central banks. If standards change, we will act accordingly," Treichl says.
He would not specify how much Erste would invest in boosting the share capital of BCR, saying that it would depend on the final decision of the NBR about minimal capital requirements.
As for BCR’s mandatory floatation this autumn, Treichl says Erste must act in the best interest of all BCR shareholders, which is why it intends to wait for "better times."
"We are in the process of negotiating with the SIFs and the Romanian Government about BCR’s planned floatation. We have not reached any decision yet."
He said it was hard to tell whether waiting for better times actually meant a two or three-year delay.
"There are too many analyses, suggestions and forecasts everywhere, but actually no one knows when we will truly see an improvement of the situations of the markets. Therefore let’s wait and see."
Treichl is not alarmed by the recent announcements of president Traian Basescu about Romania going into recession.
"We don’t see any economic contraction beyond 4% this year (Erste maintains its forecast of 2.1% decline of the economy). I believe the situation of the economy will greatly depend on the Government’s capability to use the money from the EU and IMF for the badly needed infrastructure investments. Romania has a great chance and substantial liquidity. It just needs to use them wisely."
He does not rush to say that as far as Romania is concerned, the worst is already in the past, but believes the external financing package from the IMF and EU has been a great help, which can be seen in the stabilisation of the exchange rate. Treichl was one of the bankers to have advocated Romania’s signing of an agreement with the IMF since the beginning of the year in order to reduce risk perceptions of the foreign analysts.
BCR benefited from the stabilisation of the exchange rate that tempered the increase in non-performing loans.
"Non-performing loans went up in line with our expectations in the first few months of the year, mostly because of the volatility of the RON/EUR exchange rate in the first quarter. Since then the RON has stabilised and the accumulation of non-performing loans has visibly slowed down. For the rest of the year we expect exchange rate volatility to go down even more as a result of the intervention of the IMF, of the EU and of EBRD. Still, considering unemployment is on the rise, it is hard to make forecasts about the quality of the loan portfolio, but overall we are convinced our entire portfolio in Romania will have a positive contribution to the group’s 2009 bottom line."
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