WITH SOME EU COUNTRIES ALREADY CONSIDERING IT, The burden of a new tax on banks would be borne by customers

• Baltazar: "I doubt this measure would be implemented in Romania"

After the European governments have proposed additional taxes on banks in order to lower their budget deficits, which has already been agreed upon by Hungarian, British, German and French authorities, Romanian bankers say that they don"t see any reason for implementing such a measure in Romania, mentioning however that if they were forced to implement it, it would be their customers bearing the burden.

Laszlo Diosi, the general manager of OTP Bank Romania, considers that this decision to levy an additional tax on banks is inappropriate, considering that the state did nothing to help the domestic banking sector.

"Did the state contribute in any way to the Romanian banks? Why should these banks be overtaxed, why not levy such a tax on telecom companies, for instance?", Diosi asked rhetorically.

Discussing the measure proposed by European authorities, the head of OTP gave the example of banks in Great Britain and the US, where the state spent significant amounts in an attempt to aid the banking sector.

"In Great Britain and in the United States of America their respective governments spent public money to bail out the banks, and now they want it back. But in Romania, banks have received no aid", said Diosi.

What"s certain is that the Executive has not yet presented a clear form of the new tax on banks, as confirmed by Nicolae Cinteză, the head of the Monitoring Department of the Romanian National Bank.

Contacted by BURSA, Bogdan Baltazar said the following: "In Europe, banks had an extremely important role, perhaps even being the decisive factor in the beginning of the economic crisis, unlike in Romania, where, in opposition, the banking system has been the most solid economic sector. I don"t see why such a measure would be introduced in our country".

Adrian Vasilescu, the advisor to the governor of the NBR, Mugur Isărescu, also said that it would not be fair to move to a different type of loss sharing, namely by divvying it up among all countries and all banks. "The normal thing would be for banks that did not receive any aid from the state during the crisis, to not pay anything", he commented.

On a different note, Mr. Baltazar warned however, that if the state were to decide to implement this measure, even though it has not subsidized banks in any way, its burden would be borne by customers, both lenders and borrowers.

Regardless, it will still be the population that will pay for the possible hole in banks" profits, by being asked to pay higher interests or commissions.

The general manager of OTP, the local branch of the largest Hungarian financial group, said that the state would soon be able to raise greater taxes off banks, once they begin using the IFRS accounting standards in their financial statements, which would result in greater bank profits.

The head of OTP considers that the state should focus first and foremost on adjusting public spending, because otherwise raising taxes would simply mean "throwing money down a bottomless pit".

At the moment, most banks calculate their profits using the Romanian accounting standards (RAS), a measure imposed by the NBR and the ministry of Finance, while bankers are lobbying for a switch to the IFRS standards.

The main difference between the RAS and the IFRS is the fact that the latter paints a more accurate picture of the bank"s financial situation, unlike the RAS, which entails the set up of provisions which are not compensated by collaterals, which represents a serious disadvantage, because it can require additional capitalization.

For now, the NBR requires the use of local accounting standards, which include very strict provisions concerning loan loss charges, to make sure that banks exercise cautious behavior during the crisis. This caused the net profits of banks to decrease. Over the first quarter profits in the banking sector amounted to almost 100 million Euros.