MKB Romexterra Bank, to end 2008 in the red

MKB Romexterra, a medium-sized bank in the system owned by Germany's Bayern LB, will end this year with net losses because of a significant increase in reserves. "We'll end the year in the red and we plan to recoup this loss, even despite a difficult environment, in the next one or two years," Adrian Radu, chief executive of MKB Romexterra Bank, commented for ZF. He explained the bank generated operating income, but the net result was influenced by the rising reserves set up for loans granted to individual clients and SMEs. Radu did not reveal any figures regarding the financial results for the first nine months or any full-year projection, but showed the bank had a balanced trend in the third quarter. The value of the bank's assets soared by 65% in the first 10 months, to 2.68bn RON (734m euros). After the first six months, the bank posted net losses of 7.4m euros, as reserves had climbed to 39m RON (10.7m euros). Reserves are expected to reach 45m RON (11.5m euros) by yearend. The high reserve requirements also emerged as the bank changed its risk management models as it is in full reorganisation process in order to be integrated in Bayern LB group. Radu says the bank will see moderate income in 2009, too, as the financial crisis has an impact on the real economy.