Share capital increases by banks not related to stress tests

Ana Săbiescu

The coming share capital increases by banks, are not a sign of weakness and are not the consequence of the stress tests that lenders have undergone, Mugur Isărescu, the Governor of the National Bank of Romania said. He added that these past few days, officials of the National Bank of Romania visited Greece where they had talks with the officials of the Greek banks that have subsidiaries in Romania.

"There are indeed cases of recapitalization, but these past few years we had share capital increases have occurred almost every quarter," he said.

However, the results of banks" stress tests will not be published, because they represent "sensitive information", which could affect banks, but the Central Bank will publish data on the overall status of the banking system.

• The lowering of the minimum mandatory reserves will stimulate mortgage and investment loans

Mr. Isărescu said that the conversion of banks" short term debts into long term loans is a positive factor, following the decision of the National Bank to cut the ratio of minimum mandatory reserves to 0%, for liabilities with a maturity greater than two years, created between May 24th-June 23rd.

According to Mr. Isărescu, this relaxation of reserves will stimulate mortgage and investment lending, even though it causes a shrinking of the reserves of the Central Bank. He said: "Any change on this point is good for Romania"s economy and for the banks, even though it shrinks the foreign currency reserve".

Lending will grow faster on the corporate side, in the coming period, Mr. Isărescu, said, who mentioned that in fact banks have not frozen lending, they just slowed its pace.