STEVEN VAN GRONINGEN, RAIFFEISEN: The insolvency of Hidroelectrica and the legislative amendments raise uncertainties for investors

The insolvency of "Hidroelectrica" and the amendments pertaining to the labor legislation and the fiscal system present uncertainties for investors, considers Steven van Groningen, the CEO of Raiffeisen Bank Romania. "the changes in legislation, the changes of the fiscal system, what is happening now with Hidroelectrica contributes to higher uncertainties for investors", he said. "Banks have their part, but we can't force somebody to invest, we can't force someone to consume. What is important is that we understand what we need to improve the business environment in Romania to become more competitive".

Under these circumstances, investors prefer postponing any investments and this is visible in the level of foreign investments, which has fallen to a certain degree, the president of Raiffeisen Bank explained. He said that right now, banks are managing their costs, they are very careful when it comes to lending, which is logical in a way. The reduction of the exposure of foreign banks to Romania does not represent a negative aspect if it helps us reduce our reliance on foreign financing, Steven van Groningen says. "I have seen the discussions about the exposure to Romania. The banking system is reducing exposure to the country, they probably don't have an overview, but if the conclusion is that we depend too much on foreign financing, then the reduction of the exposure can not be a bad thing. At the same time, we need to realize that if we want to have economic growth we can't finance that just using the domestic consumption. That would mean we would still be dependent on funds raised from abroad",he said.

We are currently going through a period of uncertainty in which the banking system needs to focus on what it can do and to ensure local financing, the banker considers: "If we look at our region, South Eastern Europe, I see that in relative terms, Romania looks good, compared to Hungary, Greece, and other countries. On a macroeconomic level, Romania looks relatively good. However, we are faced with a total lack of competitiveness".

Steven van Groningen considers that Romania must focus on the elements which would make it more competitive and more performing, as it has the opportunity to strengthen its position in South Eastern Europe. He said that he doesn't rule out the possibility of Romania becoming the seventh largest economy in Europe. "There is a lot of uncertainty around us but that doesn't mean that we should just sit and wait. It is an opportunity to focus more on Romania, but in order to do that we need to take steps that inspire confidence, which improve the competitiveness of the country, especially in South Eastern Europe, and I think that this is a path which we must follow. In the long term I see no reason why Romania could not end up being the seventh largest economy in Europe", the CEO of Raiffeisen Bank said.