May
2007
EXPERTS PLATFORM
 
Vol. 3 No.4  
 
   

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Helping through changes on the
Romanian banking market

As the Romanian banking market moves into more mature territory,
Radu Gratian Ghetea, president of the Romanian Banking Association, targets the issues still to address
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     Romania’s banking market is now witnessing important modifications.
     There is much for us to achieve in banking legislation and aligning practices to the European legislation.
     I refer here to the application of the principles of Basel II Capital Agreement and the preparations needed to fully apply the International Financial Reporting Standards (IFRS), which are most likely to start on 1 January 2009. The Romanian Banking Association is actively involved, together with the central bank (BNR) and the Ministry of Finance, in preparing the legislative framework for commercial banks to tackle these modifications, as well as clarifying some details regarding the text of the new banking law, which is soon due for debate in the Romanian Parliament.
     Last year saw activity in the commercial zone which changed the state of play. There was the finalisation of the privatisation of Banca Comerciala Romana, sold to Austrian bank Erste, and the ongoing merger of Banca Tiriac with HVB and Unicredit respectively, as well as the Government decision to stop privatising the Savings Bank CEC. These are just a few examples that prove this year we have a new structure of the banking system, with new ‘players’, who are getting stronger and stronger and continue to be very ambitious.
     In this context, competition in the banking market is becoming more and more visible, with beneficial results for the increase in quality of products and services and a decrease in costs for clients at the same time.
     This year is the time in which the banking community planned to achieve some very important objectives, including the establishment of the ‘Banking Mediator’ (Mediatorul Bancar) institution, automating the debit instruments deduction operations and taking a decision on how to organise the Fund to Guarantee Deposits in the Banking System in the future.
     I will elaborate on these objectives, which are a priority for the banking activity and are, in the end, stand-alone projects within the SPI programme – the Special Project Initiative for Romania’s financial sector modernisation - now run by the Romanian banking community with the support of the World Bank.
     The Banking Mediator is an institution which already exists in the majority of European states, which aims at mediating disputes that may appear between credit institutions and their individual clients. The experience of these countries proves that most of the solutions given by the Banking Mediator are accepted by the banks and their clients, thus saving time and money, which would have been spent on a court trial.
     Debit instruments, such as cheques, promissory notes and bills of exchange are now processed in a semi-automated way, which has led the banking community to ask the funds transfer and deduction company Transfond to automate the deduction operations by the end of this year.
     Currently in operation is the Fund to Guarantee Deposits in the Banking System (FGDSB), established on the principle of collecting ‘annual instalments’ from commercial banks, and which continues to function on this basis.
     However, considering the fact that the Fund has gathered important amounts of money over the years and, because we do not believe bank bankruptcies are still to happen, the Romanian Banking Association has proposed that the Fund to Guarantee Deposits in the Banking System transforms itself into a financial investments company, which would have commercial banks as shareholders.
     This issue is now under discussion with BNR representatives central bank.

The Diplomat/Wolf Theiss Experts Platform is a monthly essay written by an international or local expert on current topics of the day. The opinions expressed herein are not reflective of any opinions of The Diplomat and Wolf Theiss as to agreement/disagreement or otherwise.

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