Banks continued to borrow fromabroad in the first quarter, with the savings ability of companies,as well as of the population diminishing, and the trend being toswitch from shorter maturities to longer ones.
The long-term foreign debt takenout by banks, which largely reflects funding secured from foreignshareholders, went up by more than a billion euros in a year, toEUR16.2 billion at the end of the first quarter, while the growthrate of short-term debt was much slower.
"Most of banks' foreign loans usedto be short-term, with the debt being rolled over, but there areadvantages related to the minimum reserve requirements. Depositswith maturities of over two years are exempt from payment of theminimum mandatory reserves. This could be the explanation,"believes Radu Crăciun, investment manager at Eureko Pensii.
The decline in banks' short-termdebt could be explained by the attempt to turn some of theshort-term funding into long-term loans in order to improve cashflow indicators.
Banks' overall foreign debtreached EUR22.9 billion at the end of March 2011, EUR1.3 billionmore than in March 2010.
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