BRD, the domestic branch of Societe Generale remains unaffected by the problems of the parent bank, says Patrick Gelin, the bank's chairman, after the French announced in Paris losses worth 4.9 billion euros as a result of fraudulent financial operations.
The group also announced it had set aside reserves worth 2 billion euros, to cover potential losses caused by exposure to the US subprime market.
"BRD secures its cash from the domestic market. We have lines of credit from Societe Generale, too, but we get most of our financing locally," Gelin told a news conference yesterday. The bank is the second leading player in the system, in terms of assets.
Last September the bank reported funds attracted from clients worth 23.97 billion RON (7.1 billion euros). The total credits granted at the time stood at 22.67 billion RON (6.7 billion euros).
Therefore the credit/deposit ratio stood at 95% in BRD's case. As a comparison, BCR, the largest bank in the system in terms of assets, registered a 121% ratio in September, as the loans it had granted totalled 9.6 billion euros, 1.7 billion euros higher than the deposits attracted. BRD's top man explained that neither the results nor the development plan this year would be affected by the problems the group reported yesterday. "We are not concerned by these things under any circumstances."
Societe Generale announced yesterday that despite the record losses made from trading, it would still post a 600-800 million euro net profit.
The group operated a 5.5 billion euro capital increase, which was immediately underwritten by JP Morgan and Morgan Stanley. The SocGen Group owns 1,000 billion euros in assets worldwide.
BRD will publish its financial results for 2007 on February 21, at the same time as its parent bank.
Sorin Popa, BRD's deputy general manager says that the 2007 results are in line with the budget forecast. Nine months into the year, the bank had made 207 million euro net profit, the highest in the entire banking system at that moment. Locally, BRD applies risk management policies in line with the Basel II agreement, adjusted to the regulations of the National Bank.
Petre Bunescu, deputy general manager of the bank in charge of risk management says that the NBR closely monitors the local banks, which are required to file reports on the policies applied on a regular basis.
BRD shares listed on the Bucharest Stock Exchange gained 1.5% yesterday afternoon, closing at 20 RON, after having been suspended in the first part of the day. The BET index, which gauges the performance of the most liquid ten stocks, went up 2.59%, after several sessions of decline in a row.
Analysts believe BRD will not be affected by the losses of the parent bank too much.
"BRD is still financing its lending operations by itself for the time being, as the volume of deposits is higher than the loans granted. It might have a negative impact on the funding in euros of the bank, in that its refinancing costs in euros will increase, which will reduce its margins. I believe the first-quarter results will show whether it will have a negative effect or not on the bank's operations," believes Florin Ilie, head of the capital markets department at ING Bank.
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