by Lidia Moise, Lin Huifen
BUCHAREST, July 20 (Xinhua) -- Romanian central bank has prepared itself for a contagion risk from the Greek crisis through a number of measures, Mugur Isarescu, governor of the National Bank of Romania said in a recent interview with Xinhua.
Romanian banking system has no direct exposure to the Greek sovereign debt crisis, but there are possible channels for contagion and those must be strictly monitored, admitted Isarescu, as Greek banks currently hold about 16 percent of Romania's total bank assets.
The governor described the overall situation of the local banking system as being "under control," and explained that previous circumstances have placed banks in a better position to cope with the sovereign debt crisis.
Romania was severely struck by the global financial crisis in the winter of 2008, and in March 2009 asked for the International Monetary Fund's help.
"We looked at all the banks we have here and there are essentially Romanian banks with foreign capital, mostly subsidiaries of European financial groups. We called for the parent groups, long before the stress tests conducted by European banks, to rise the level of capital," Isarescu said.
"I can tell you that our stress tests and requests for capital were much tougher than those made in Europe," he added.
As a result of central bank's requirements, Romanian banks exceeded the international capital adequacy ratios. By the end of the first quarter of 2011, local banking system's solvency ratio was 14.88 percent, while the Basel Accord puts the ratio at 8 percent.
The capital adequacy ratio measures risk-weighted assets and it is used to evaluate a bank's capacity to cope with liabilities and with other risks. Asking the foreign parent banks to rise the capital, in already difficult times, was a severe exam, said the governor.
"All these parent banks behaved impeccable. We never had any delay, we had no argument, or any negative reaction, the main shareholders behavior was impeccable," he said.
