IN ORDER TO SAVE BANKS Iohannis has endorsed the seizing of bank deposits

Klaus Iohannis has signed the law which allows the confiscation of unguaranteed deposits (bail-in) to save distressed banks, by promulgating yesterday the law on the resolution and recover of banks and investment firms. Romania's president has no reason to worry about his money potentially vanishing from his bank accounts, because, according to his wealth statement, he keeps his money in properties, while his savings are less than 50,000 Euros, meaning half of the amount guaranteed by the state for a bank deposit, in the event of a default of the financial institution.

Deputies have recently validated, as a matter of urgency, this law, as Romania was being forced by the European Commission to pay penalties daily for each day of delay until the full transposing of the European legislation in the sector.

The new legislation also involves the application of the bail-in (a procedure which also involves the confiscation of the unguaranteed deposits, to save troubled banks).

The European Commission recently notified the Court of Justice of the European Union about the failure to transpose the Bank Recovery and Resolution Law (BRRD) by Luxemburg, Poland, the Czech Republic, Romania, Sweden and the Netherlands).

The deadline for transposing these regulations in the national law was December 31st, 2014. Romania is among the countries which the EC has begun the infringement procedure against for the failure to transpose Directive 2014/59/EU.

Economic analyst Ionel Blănculescu thinks that such a legislative project has not been approved so far because it is unconstitutional, as it also concerns the application of the bail-in.

Speaking about the bail-in, Nicolae Cinteză, the head of the Oversight Division of the NBR, told us, in the beginning of June: "The text that the Central bank sent to the Ministry of Public Finance does nothing else but transpose the European provisions. We have to understand that it's not the NBR that demands the application of the bail-in, as one of the possible solutions to saving distressed banks, but the European Union".

He thinks that the bail-in procedure will not happen in Romania, because "people have understood the need to protect themselves", in other words they have taken care not to set up deposits bigger than 100,000 Euros.

The shareholders of the institution in question will be the first to bear the losses, with its creditors being next in line, according to the priority of their claims in an insolvency procedure, with the exception of the case where the present law expressly stipulates otherwise, and individuals and companies that have contributed to putting the distress of the bank subjected to the resolution procedure will be held liable according to the criminal or civil law.

Yesterday, the head of state has also passed the Law concerning the Deposit Guarantee Schemes and the Bank Deposit Guarantee Fund.